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International wholesale voice-over-Internet-protocol (VoIP) provider iBasis Inc. says that the U.S. Securities and Exchange Commission has dropped its investigation into the Burlington company’s practices of granting stock options.
According to iBasis (Nasdaq: IBAS) officials, the company was notified in a letter that also said the SEC staff won’t recommend any enforcement action against the company, or any of its current or former officers or directors.
This is the second win for iBasis regarding its stock option grant practices. In December of 2007, the U.S. District Court in Massachusetts dismissed all claims in a derivative lawsuit filed alleging grant date manipulation in the award of stock options to current and former directors and employees of iBasis, company officials said.
In 2006, iBasis announced it would restate its financial statements to correct errors related to its accounting for noncash, stock-based compensation between 1999 and 2006. Also, company officials conducted an internal review and terminated the employment of Jonathan D. Draluck, the company’s former vice president of business affairs and general counsel.
Draluck, who is now working at Israeli firm Meitar Liquornik representing biotech and technology clients, responded to the news via e-mail. “I am gratified but not surprised that the SEC’s fair-minded investigation of iBasis has been terminated, with no action taken against anyone,” he said. “I am proud of my contributions to the company as its General Counsel, including my role in initiating an independent review of past stock option practices (which practices began prior to my arrival), and feel fully vindicated by the outcome of this long process.”
In August, iBasis sued its parent company Royal KPN NV over KPN’s attempt to acquire 100 percent of iBasis. The suit, iBasis’ second legal action against KPN, was filed in the U.S. District Court for the Southern District of New York against KPN, other KPN entities and certain members of KPN’s management. It alleged KPN has violated federal securities laws. KPN has offered to pay $1.55 per share, an amount iBasis calls “grossly inadequate.”
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