SEC Eyes ‘Springloading’

WASHINGTON -- In a broadening investigation, the Securities and Exchange Commission is examining whether companies timed stock option grants so executives would benefit from company news, The Los Angeles Times reported Wednesday.

Authorities said they are looking into possible instances of "springloading," in which a company purposely schedules an option grant ahead of expected good news or delays it until after it discloses business setbacks likely to send shares lower. In both cases, the idea is to springload the option to increase its value to the recipient, the paper reported.

"We will be very interested in both kinds of springloading," said SEC Chairman Christopher Cox, acknowledging it could be difficult to prove an improper connection between the timing of news and option grants, the paper reported.

In one possible scenario, a company might hold off on releasing favorable news until shortly after options have been granted, the paper reported.

-- NYSSCPA.org News Staff

Posted on 6/21/06