Biotech Values

[DewDiligence]

Cyberonics Says SEC Probing Stock Options

[Perhaps the SEC will find other interesting stuff while they’re at it. This company has no shame.]

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060612:MTFH65836_2...

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Mon Jun 12, 2006 8:55 AM ET

CHICAGO, June 12 (Reuters) - Medical device maker Cyberonics Inc. < CYBX > on Monday said the U.S. Securities and Exchange Commission is conducting an inquiry into stock options granted at the company.

In recent weeks, about 30 public companies have disclosed criminal, regulatory or internal probes into possible manipulation of stock options.

Cyberonics, which makes implantable devices to treat severe depression and epilepsy, last week denied allegations by a securities analyst that certain stock option grants were timed to create a windfall for its executives. In the SEC filing, the company said it has confirmed that the grants in question were approved unanimously by its board of directors without any participation by management. Cyberonics said the options, which vest over a five-year period, were previously disclosed in SEC filings.

"None of the options subject to the grants have been exercised and none of the underlying shares have been sold," the company said in the filing.

Cyberonics said it will review its prior options grants and practices, in cooperating with the SEC.

Last week, Robinson Humphrey analyst Amit Hazan issued an investor advisory saying certain Cyberonics options were granted by the board just hours after the company received positive news about the regulatory prospects for its depression device.

Hazan said the options were granted after a U.S. medical advisory panel recommended approval of the device but before Cyberonics shareholders got to trade on the news.

The next day, Cyberonics shares jumped 78 percent. Cyberonics Chief Executive Robert "Skip" Cummins reaped an "overnight paper profit" of $2.3 million, and two of his lieutenants also benefited, Hazan wrote.
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