The Securities and Exchange Commission has sued Carole D. Argo, alleging the former SafeNet Inc. executive "engaged in a fraudulent scheme" to rig stock option awards, netting herself and select colleagues millions and causing the Harford County technology company to issue false financial reports.
The civil lawsuit, filed Wednesday in U.S. District Court for the District of Columbia, comes a week after Argo, 46, was indicted in federal court on related criminal charges of securities fraud and conspiracy.
Argo's New York-based attorney, Paul Engelmayer, did not return a call requesting comment yesterday, but he has previously said that the Baltimore resident is innocent of the allegations and "looks forward to her vindication in a court of law."
The 33-page SEC complaint claims Argo illegally "backdated" stock option awards for herself and other executives to take advantage of lows in the SafeNet share price and reap maximum profits. She's one of at least eight U.S. executives who have been criminally charged amid widespread corporate investigations.
It's acceptable to backdate options, which typically allow people to purchase stock in the future at current prices, if they are properly taxed, accounted for and disclosed, but illegal if they are not.
"Defendant Argo, among other things, violated the anti-fraud provisions of the federal securities laws, falsified SafeNet's books and records, and caused SafeNet to issue false and misleading financial reports," the SEC complaint states.
In September, SafeNet said it would have to restate earnings from 2000 through March 2006. The company ceased being public in April, when California's Vector Capital Corp. acquired it for $634 million.
Argo resigned from her positions as president and chief operating officer at SafeNet in October, along with Chief Executive Officer Anthony A. Caputo. Both the SEC complaint and the federal indictment claim Caputo benefited financially from the re-dating, though he has not been charged with wrongdoing.
The SEC is asking for financial penalties from Argo, a return of any gains she may have illegally received, and a permanent ban prohibiting Argo from serving as an officer or director of a public company.
"Unless enjoined, defendant Argo will likely commit such violations in the future," the complaint states.