August 24, 2009 / 3:37 PM / 9 years ago

CORRECTED-UPDATE 2-Ex-Monster COO guilty of options fraud

(Corrects Treacy’s title in headline and first paragraph to former chief operating officer from former chief executive officer)

* Jury rules ex-Monster head guilty in backdating scheme

* Accused of falsely inflating company earnings

* Company says closer to putting issue behind it (Adds statement from company, byline)

By Grant McCool

NEW YORK, May 12 (Reuters) - James Treacy, the former chief operating officer and president of job recruiter Monster Worldwide Inc MWW.N, is guilty of securities fraud and conspiracy in a stock options backdating scheme, a U.S. jury ruled on Tuesday.

The jury issued its verdict on the first day of deliberations in Manhattan federal court in the criminal trial before U.S. District Judge Jed Rakoff.

Treacy was charged in April 2008 by federal prosecutors who said the backdating scheme led to the fraudulent understatement of the company’s compensation expenses by more than $300 million.

He was accused of conspiring with other former top executives at the job recruitment website to systematically backdate option grants to company employees between 1997 and 2003, falsely inflating the company’s earnings.

“This verdict brings us closer to the end of an unfortunate chapter in the company’s history and closer to putting the issue firmly behind us,” Monster Worldwide said in a statement.

“Our current executive team and Board of Directors has spent the last two years refocusing Monster on its customers and shareholders, retooling the day-to-day management and overhauling governance so that the company adheres to the highest standards.”

The charges stemmed from an investigation into the global employment listings service for options backdating, a practice in which option grant dates are changed retroactively to allow recipients to reap greater profit. The practice in itself is not illegal as long as it is properly disclosed and accounted for in financial statements.

Treacy faces as much as 25 years in prison and hundreds of thousands of dollars in fines.

The case is US v Treacy 08-366 in U.S. District Court for the Southern District of New York (Manhattan) (Reporting by Grant McCool; Editing by Richard Chang and Andre Grenon)

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