What is backdating
Companies would simply wait for a period in which the company's stock price fell to a low and then moved higher within a two-month period.
Initially, lax enforcement of the reporting rule was also blamed for allowing many companies to sidestep the rule adjustment that stemmed from Sarbanes-Oxley.
Due to this ambiguity in the contract documents, the trial court was permitted to look at the evidence of the parties’ intent outside of the documents, and it found that the FDIC didn’t acquire an interest in the loan until June 2009, regardless of the stated effective date in the main agreement.
The appellate court affirmed the trial court and stated: The law does not support the blanket conclusion that a retroactive effective date in a contract is only enforceable when the evidence demonstrates that the parties had agreed to the material terms of their contract as of the retroactive date.
The parties’ intent for the transaction to have retroactive effect must be clear.
Merely stating a retroactive effective date in the main agreement may not do the trick.