Misrepresentation versus memorialization Whether backdating a document is appropriate depends on the backdating’s “purpose and effect.” Backdating to perpetrate a fraud is obviously unethical and illegal.
However, backdating to memorialize a prior act or event is a legitimate and necessary practice.
Perhaps the most fraudulent form of impermissible backdating is documenting and dating an act that never occurred. Additionally, backdating is impermissible when the backdated document describes an act that actually occurred, but at a date subsequent to the date of the document, in order to secure benefits to which a party is not entitled.
A lawyer should be certain of the relevant facts before backdating a document.
There are several reasons for this difficulty, including that ambiguous law might govern the time of an event and relevant facts may be uncertain.
Because they can create uncertainty regarding the date of an agreement, both present challenges for a lawyer considering backdating a document.
Drafting and executing a document after an event occurs, but in a manner that accurately reflects the date on which the event transpired, is a permissible form of backdating.
This is backdating that memorializes, something the United States Court of Appeals for the Seventh Circuit has recognized as a legitimate practice.
16, 2009 – In recent years, the business media have frequently reported on companies who “backdated” executives’ stock option grants to dates when the stock price was low.