If lawyers are involved in the practice, they may also face disciplinary penalties under their professional conduct rules, such as having their practising certificate revoked.
In 2014, a solicitor in the UK had her practising certificate revoked when she backdated a letter to the lawyers for the other side in litigation proceedings to make it appear that she had complied with a court order to submit medical evidence to the other side by a certain date.
A document may be backdated for a variety of reasons, some of which are innocent and some of which are improper or fraudulent.
Therefore, the alternative hypothesis we propose, which we broadly label Agency Hypothesis, is that a firm’s involvement in the backdating scandal has significant economic implications, despite its limited (direct) impact on cash flows.
Alternatively, a letter might be backdated to make it appear that information was provided, or an offer accepted, before the relevant deadline.
Backdating a document for the purpose of misleading or deceiving third parties is clearly improper and often triggers civil or criminal liability.
“The process and paperwork behind this has gotten much more rigorous,” Ms. Backdating litigation was often consolidated into class actions or brought by shareholders on behalf of the company.
The Securities and Exchange Commission filed 32 of the cases, including one against William Mc Guire, the former CEO of United Health, that resulted in a 8 million settlement. Mc Guire didn’t admit or deny any wrongdoing in the settlement.