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Cyberonics Under Fire for Stock Option Grants

The New York Times and Reuters News report that the board of Cyberonics, Inc. approved stock option grants for three executives just hours after the company received positive regulatory news in June 2004. The next morning, the company's shares posted huge gains. The timing came to light when Amit Hazan, a device industry analyst for SunTrust Robinson Humphrey, noted it in an investor advisory.

The Houston-based company, a pioneer in the controversial field of neurostimulation, denies allegations that the options were specifically timed to create a windfall.

Is Cyberonics guilty of insider trading? We'll leave that up to the experts. Is Cyberonics guilty of bad judgment? Resoundingly, yes. If it walks and quacks like a duck, people will think it is a duck.

Full disclosure: Cyberonics has been named one of MD&DI's 50 Companies to Watch, a feature that appears in the June issue, now available online.

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