http://www.bloomberg.com/apps/news?pid=10000103&sid=aZV_vrEMzB5o&refer=us

Apologize in advance if this has been already posted.....busy day so have not read all of todays posts.

SEC`s Cox Calls Options Probes a `Serious Concern` (Update1)

June 6 (Bloomberg) -- U.S. Securities and Exchange Commission Chairman Christopher Cox said the growing number of companies under investigation for possible manipulation of stock-option grants is ``of serious concern`` to the agency.

Cox, in his most specific remarks so far about the possible backdating of executive stock options, indicated the agency is paying close attention to the issue as more companies become involved.

``We have already learned that the problems are more than episodic,`` Cox told reporters today in Washington. ``The apparently widespread nature of the problems is of serious concern to the commission.``

At least 34 companies have disclosed criminal, regulatory or internal probes into whether they manipulated or falsified dates on options awards to benefit top executives. More than a dozen executives, including five chief executive officers, have lost their jobs at the companies after investigators questioned dates of option grants.

Options are usually granted so executives will work harder to find ways to raise the stock price. Investigators are looking at whether grants on some options were changed to coincide with low stock prices and help ensure executives profited regardless of their performance.

SEC Regulation

While declining to comment on the ongoing investigation by the SEC`s enforcement division, Cox said the commission may require better disclosure of how companies grant options because of the backdating scandal.

``Our executive compensation rule will improve our ability to deal with this issue, and I may have more specifics on that shortly,`` Cox said. He did not elaborate.

The SEC proposed the regulation in January, before the backdating of option grants emerged as a major issue. The rule was designed to make companies reveal more about the benefits and perks given to top executives. The SEC staff is now revising the proposal based on public comments.

Two studies say companies` stock-option problems could be much wider than disclosed so far. Erik Lie, the University of Iowa finance professor who helped spark the investigations, has said as many as 10 percent of all stock options granted before the rules were tightened in 2002 were backdated. A study by analysts at Merrill Lynch & Co. released yesterday said 40 companies in the Standard & Poor`s 500 may have backdated their option grants.

To contact the reporter on this story:

Laurence Arnold in Washington at larnold4@bloomberg.net

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