Citation
Reporters aren't known for writing algorithms, but one that The Wall Street Journal's Charles Forelle devised helped trigger federal investigations of nearly 140 companies for massive and long-hidden fraud. Forelle, working with Journal colleagues James Bandler, Mark Maremont, and Steve Stecklow, used the statistical-modeling technique to find likely perpetrators of stock-options abuses. The Journal showed that options were often rigged, providing billions in extra pay for executives. In one case, the Journal determined that the odds of a chief executive's stock-option grants always being dated just before a rise in the stock price were one in 300 billion. In another case, one in 200 million. As a result of the Journal's inquiry, at least 70 top business executive lost their jobs.

Excerpt
The Perfect Payday
March 18-19, 2006
On a summer day in 2002, shares of Affiliated Computer Services Inc. sank to their lowest level in a year. Oddly, that was good news for Chief Executive Jeffrey Rich.
His annual grant of stock options was dated that day, entitling him to buy stock at that price for years. Had they been dated a week later, when the stock was 27% higher, they'd have been far less rewarding. It was the same through much of Mr. Rich's tenure: In a striking pattern, all six of his stock-option grants from 1995 to 2002 were dated just before a rise in the stock price, often at the bottom of a steep drop.
Just lucky? A Wall Street Journal analysis suggests the odds of this happening by chance are extraordinarily remote-around one in 300 billion. The odds of winning the multistate Powerball lottery with a $1 ticket are one in 146 million.
Suspecting such patterns aren't due to chance, the Securities and Exchange Commission is examining whether some option grants carry favorable grant dates for a different reason: They were backdated. The SEC is understood to be looking at about a dozen companies' option grants with this in mind.
The Journal's analysis of grant dates and stock movements suggests the problem may be broader. It identified several companies with wildly improbable option-grant patterns. While this doesn't prove chicanery, it shows something very odd: Year after year, some companies' top executives received options on unusually propitious dates. (An explanation of the methodology is below.)
The analysis bolsters recent academic work suggesting that backdating was widespread, particularly from the start of the tech-stock boom in the 1990s through the Sarbanes-Oxley corporate reform act of 2002. If so, it was another way some executives enriched themselves during the boom at shareholders' expense. And because options grants are long-lived, some executives holding backdated grants from the late 1990s could still profit from them today.
Mr. Rich call his repeated favorable option-grant dates at ACS "blind luck." He said there was no backdating, a practice he termed "absolutely wrong." A spokesman for ACS, Lesley Pool, disputed the Journal's analysis of the likelihood of Mr. Rich's grants all falling on such favorable dates. But Ms. Pool added that the timing wasn't purely happenstance: "We did grant options when there was a natural dip in the stock price," she said. On March 6, ACS said that the SEC is examining its option grants.

Biography
Charles Forelle is a reporter in The Wall Street Journal's Boston bureau. He joined the Journal as an intern in June 2002. Born in New York, Forelle received a bachelor's degree in mathematics from Yale, where he was managing editor of the Yale Daily News from 2000 to 2001. He currently resides in Boston.

James Bandler is part of the Journal's special projects reporting team and is based in Boston. He joined the Journal in September 1999 as a health care and education writer. A graduate of Brown University, Bandler has also worked at the Rutland Herald, Barre Times Argus, and Boston Globe.

Mark Maremont is a special projects editor at the Journal, based in Boston. He joined the paper in May 1997. Maremont began his journalism career as a New York-based telecommunications editor at BusinessWeek. Maremont received a bachelor's degree from Brown University and a master's degree from Columbia University.

Steve Stecklow is a senior special writer and news editor in the Journal's Boston bureau. He previously worked in the Journal's London bureau as a global investigative reporter. He has also worked at the Atlantic City Press, Philadelphia Bulletin, Washington Star and Philadelphia Inquirer. Stecklow received a bachelor's degree from the University of Pennsylvania.