By: Cydney Posner

This weekend's WSJ contained an article regarding option dating problems giving rise to discount options and recent utterances from the PCAOB and the IRS on that topic. Note that while the article states that, in addition to intentional backdating and misdating, the PCAOB identifies springloading as a potential problem, a footnote in the PCAOB's Alert actually provides some comfort from an accounting perspective with respect to discount option treatment: "In addition, academic research has suggested the possibility that some issuers may have purposefully granted options immediately before the release of information that the issuer believed would be favorable to its share price. While these practices may not result in the granting of discounted options, they may create legal or reputational risks and raise concerns about the issuer’s control environment."

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