by T. GormanPosted on Posted in SECActions

In a letter SEC Chief Accountant Conrad Hewitt gave guidance on the accounting for certain stock option issues. The letter begins by noting that guidance in the literature for previous options grants is, in most cases, in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. Under this Opinion a key issue is the measurement date “which is defined as ‘the first date on which are known both (1) the number of shares that an individual employee is entitled to receive and (2) the option or purchase price, if any,'” quoting APB 25. The determination of the measurement date is the key to many of the issues discussed. Issues discussed in the letter include:1) The application of the measurement date to awards which predate the actual award date;  2) The validity of prior grants when they do not comply with shareholder approved requirements or the terms of the plan;  3) The approval of option awards before the number of options to be granted to each employee is finalized; 4) Grants where the exercise price is set using a formula; 5) Grants prior to the commencement of employment;6) Grants where the documentation is incomplete; 7) Grants which were timed to coordinate with the public disclosure of information; and 8) Income tax benefits related to options. The text of the letter can be reviewed at www.sec.gov/info/accountants/staffletters.shtml 

 

by T. GormanPosted on Posted in SECActions

The SEC resolved an action brought against Biopure Corporation and its General Counsel with the entry of a consent decree enjoining the company from future violations of the antifraud and reporting provisions of the federal securities laws, General Counsel Jane Kober from aiding and abetting violations of the reporting provisions, and requiring Ms. Kober to pay a $40,000 fine. See SEC v. Biopure Corporation, et al., Civil Action No. 05-11853-PBS (D. MA) http://www.sec.gov/litigation/litreleases/2006/lr19825.htm  The consent decree also requires the company to retain an independent consultant to review its disclosure and to adopt the recommendations of the consultant.  The SEC’s complaint alleged that the company failed to disclose negative information it received from the FDA regarding the approval of its synthetic blood product or falsely disclose the information as positive results.  The SEC dismissed the antifraud charges against Ms. Kober.