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The Seattle Post Intelligencer reports that Costco has been issued a subpoena by a federal grand jury looking for information about how it has granted stock options to its employees.

Costco said it would cooperate with the federal investigation. However, the company also said it was satisfied with the results of an internal investigation - led by independent directors William H. Gates, father of Microsoft Corp. Chairman Bill Gates, former Washington state Gov. Dan Evans, and Charlie Munger, vice chairman of Berkshire Hathaway Inc. – that concluded that while there were dating problems, there was no evidence of fraud.

The Post Intelligencer notes that Costco “is among more than 200 companies that have disclosed federal or internal investigations into their stock options practices.”

According to the paper, “Costco has said options for about 1,000 employees from 2000 to 2003 carried an artificially low exercise price. The company took a $46.4 million charge in the second quarter to remedy income tax problems related to the options grants. Chief Executive Jim Sinegal and Chief Financial Officer Richard Galanti gave up their 2006 bonuses due to their responsibility for those option grants.”
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