Mr Alexander, a talented immigrant, should be a capitalist folk hero. Unlike most wonders of the dot-com boom, Comverse has a real business, sells products worldwide and is still valued at $4.4 billion. But he became a wandering fugitive from justice, the hunted subject of an Interpol red notice. On August 9 Mr Alexander and two former colleagues were among the first to be charged with America’s latest commercial crime: backdating share options. They are also accused by the US Justice Department over options for phantom workers, which could be doled out later to the most deserving employees.

That would epitomise unacceptable boardroom arrogance. In America, such arrogance has become the object of a witch hunt. The Securities and Exchange Commission is investigating more than 80 companies, many of them California technology businesses.

Now the FBI has muscled in. It is already looking at 52 companies for possible criminal fraud. If the FBI has its way, the guilty will be put behind bars until the keys rust.

There is a snag. Directors targeted for criminal charges over Enron, WorldCom et al had failed investors in the bubble years. Bernie Ebbers is starting 25 years in jail. Another misguided chief executive, who vainly tried fraud to save his ailing paper company, was given 15 years this week. But many of the companies that are now combing through their books for share option fiddles are successful and the last thing investors want is their chief executives removed for long sojourns in prison.

When Steve Jobs, one of Apple Computer’s founders, returned to run the company a decade ago, it seemed like a museum piece in the making, the plucky loser to Microsoft. Under his guidance, however, Apple’s market value has risen thirtyfold. It is now valued at three times the highest it reached at the peak of the dot-com boom.

But Apple has discovered share option “irregularities” related, among others, to the boss’s remuneration. The company has told investors formally that its financial reports from 2002 on “should not be relied on” and keeps delaying its results for accounts to be restated. Now share analysts say the worst risk facing Apple would be the loss of Mr Jobs.

Option fiddles were so commonplace that they acquired nicknames. Simple backdating was a winner in a rising US market. It was not so easy in the UK because of prompt disclosure rules. Accounting properly for the true cost of share options, on both sides of the Atlantic, should limit temptations to backdate. But this does not stop “spring-loading”, which is timing options just before an announcement that is likely to boost the share price. Nor would governance rules eliminate “bullet-dodging”: delaying the granting of options until some bad news has hit the share price.

One of the worst malpractices in the UK is for an incoming chief executive to announce massive write-offs and a big dividend cut, then have himself awarded share options at the low price after this bad news to give him an incentive to improve things. Another is to issue new options to replace those that become worthless because of poor performance.

The UK’s Financial Services Authority ruled recently that granting share options amounts to dealing in shares, so any manipulation by those granting or receiving the options is, at worst, insider trading and, at least, market abuse subject to hefty fines. This sounds a sensible approach.

US hysteria reflects special factors. Stock market capitalism has the status of religion so crimes against it are particularly heinous. And the options scandal is being used as a case for keeping the Sarbanes- Oxley rules, which deter foreign firms from using New York as a financial centre.

Making one fiddle a crime merely drives malpractice in other directions. Disclosure, using up-to-date accounting rules, is the best preventive. A board that directly represents shareholders would give far more protection and even then investors must be vigilant.

Good people deserve high rewards. But when directors claim to align their rewards with investors, we are likely to get the same result as when we claim to be equal: some are more equal than others.

For more investment articles visit www.timesonline.co.uk/invest

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