SiliconBeat

Three former outside directors at Mercury Interactive settled charges brought against them by the Securities and Exchange Commission, according to a release the SEC posted Wednesday.

Igal Kohavi, Yair Shamir, and Giora Yaron — who served on the board of directors of the company from 1997 through 2005, and who served on its compensation and audit committees from at least 1997 to 2002 — were charged by the SEC with “recklessly”approving backdated stock option grants, and with reviewing and signing public filings that contained “materially false and misleading disclosures about the company’s stock option grants and company expenses.”

The SEC’s complaint, filed in federal district court for the Northern District of California, alleged that senior management at Mercury engaged in a fraudulent scheme that involved the backdating of 45 stock option grants to employees and executives that concealed hundreds of millions of dollars of compensation expenses on Mercury’s financial statements.

Without admitting or denying the allegations, each of the former directors agreed to pay a civil penalty of $100,000 and agreed to never do such things in the future.

The SEC previously filed civil fraud charges in against Mercury and four of its former senior officers – former Chairman and Chief Executive Officer Amnon Landan, former Chief Financial Officers Sharlene Abrams and Douglas Smith, and former General Counsel Susan Skaer – based on the officers’ stock option backdating scheme and fraudulent disclosures concerning, among other things, Mercury’s “backlog” of sales revenues to manage its reported earnings. Mercury, which was acquired by Hewlett-Packard Company on Nov. 8, 2006, after the alleged misconduct, settled the matter by agreeing to pay a $28 million penalty.