Tech companies are the primary focus of the SEC’s recently announced and currently ongoing inves­ti­gation into options dating irreg­u­lar­ities, which makes sense given their proclivity for awarding stock options as part of compen­sation packages with employees.

An article in BusinessWeek documents what tech company execu­tives have recently termed a “witch hunt”:

Many execu­tives are surprised by the breadth of the government’s probe, which has resulted in SEC inves­ti­ga­tions into 80 companies and criminal indict­ments against former execu­tives at Brocade Commu­ni­ca­tions and Comverse Technology.

I think that speaks to the rampant abuse we’re going to see coming out into the open as a result of the probe. The SEC wouldn’t inves­tigate unless they were reasonably certain there was wrong­doing to be found.

One tech company executive, Daniel Warmen­hoven of Network Appliance, is inter­viewed for the article. The exec spoke out publicly because the company has just performed a compre­hensive review of their options practices and deemed themselves in the clear.

“I thought the SEC’s role was to build investor confi­dence. What they’re doing right now is destroying it, and I don’t see the purpose.”

Applying a statute of limita­tions to this sort of white collar crime (let’s call it what it is) would send an even worse message to investors and their brittle confi­dence than all this pesky investigating.

Improving compliance with regula­tions and GAAP will do more to inspire confi­dence in the markets than sweeping all this under the rug.