By backdating


When we say “backdating” what we usually mean is executing a document and then dating it with an earlier date than the actual date of execution, with the intention that it should be treated as giving rise to legal rights before the actual date.

We are very grateful for the comments and suggestions of two anonymous referees, Robert Battalio, Vidhi Chhaochharia, Douglas Cumming, Alex Edmans, John Griffin, Jean Helwege, Randall Heron, Jiekun Huang, Gregg Jarrell, Eric Kelley, Sandy Klasa, Alok Kumar, Doron Levit (NFA discussant), Erik Lie, Emmanuel Morales-Camargo (SWFA discussant), Tao Shu (FMA discussant), Richard Sias, Konstantinos Stathopoulos (EFA discussant), Kevin Tang, Joe Zhang, Tingyu Zhou (CFA-JCF discussant) and seminar participants at University of Miami, University of Michigan-Dearborn, as well as 2012 NFA, 2013 SWFA, 2013 FMA, and 2013 EFA meetings and the 2014 CFA-JCF Conference on Financial Market Misconduct.

In such cases it would be perfectly proper for the parties to re-execute an identical document to replace the missing one.

Slightly more tenuously, where the parties reached a binding agreement on a certain date, but only reduced it to writing on a later date, they might be justified in putting the date of agreement rather than the date of execution if the terms were in fact identical (a more likely scenario given the length and detail of many modern written contracts would be where the terms of contracts are agreed by e-mail on a certain date, but the parties were only available to sign the actual physical documents upon a later date).

My father (who was also a lawyer) used to love telling a story about how he was able to triumphantly prove to the court that a yacht charter was backdated by showing the stamps which had been used to pay the nominal 15¢ stamp duty were in fact first issued by the post office some four months after the date stated on the face of the document.

However, he rarely adds that he actually ended up losing that trial, which brings us to my second point – even though the law generally deprecates the backdating of documents, the legal consequences of backdating are highly variable.

In certain cases a criminal act may negate insurance.

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