DALLAS, Texas – Dallas-based law firm Baron & Budd, P.C. has been appointed co-lead counsel in Middlesex County Retirement System v. Semtech Corp., in which the plaintiffs allege that Semtech manipulated grant dates for stock options to its directors, resulting in understatement of Semtech’s compensation expenses and overstatement of its reported income.

Semtech’s own filings with the Securities and Exchange Commission reveal that the stock option backdating scheme resulted in a $91 million overstatement of Semtech’s reported net income over a period of years and significantly misled shareholders about the financial condition of the company. Once the scheme came to light, Semtech’s stock prices plummeted from May to July 2006.

Baron & Budd attorneys Burton LeBlanc and Patrick O’Connell will head up the law firm’s representation of co-lead plaintiff State of Mississippi Public Employees Retirement System. The case is currently pending before the United States District Court for the Central District of California.

Before the Sarbanes-Oxley Act was signed into law in 2002, companies could choose their own policies for determining the date of stock grants, so long as they adhered to the procedures they filed with the SEC. Instead, many companies manipulated the date of stock grants to increase the pay-off to insiders receiving stock options.

“The fact that this manipulation was commonplace never justified its practice,” says Russell Budd, managing shareholder of Baron & Budd.

More than 140 companies have been implicated in the stock option backdating scandal. And because manipulation of stock grant dates can make executive compensation appear lower and profits appear higher than they really are, companies have been forced to restate their earnings as these problems come to light.

“These companies played loose with the rules to put more money into the pockets of company executives at the expense of their shareholders,” says Burton LeBlanc. “We are seeking justice for the shareholders who were damaged by the greed of some Semtech executives.”

New rules concerning executive compensation passed by the Securities and Exchange Commission have made it easier to find these tricks, and the SEC is investigating many companies to identify the resultant problems. Semtech’s scheme became the subject of such an SEC inquiry and a grand jury investigation

The Sarbanes-Oxley Act now requires that companies report the effective date for stock options within two trading days after they are awarded, making it difficult to manipulate the grant date very much at all.

“Baron & Budd is best known as a leader in environmental and occupational injury cases,” says Russell Budd. “But securities cases like this one fall right into line with our law firm’s mission—protecting what’s right.”

In late 2005, as co-lead counsel in In re 7-Eleven, Inc. Shareholders Litigation, Baron & Budd succeeded in increasing the tender offer's price per share in a transaction to turn the convenience store from a publicly-traded company into a privately-held entity, substantially increasing the amount paid to 7-Eleven shareholders.