SEC rejects Cisco option option

Think again

The Securities and Exchange Commission has rejected attempts by Cisco and other tech companies to reduce the impact of new accounting rules on share options.

The SEC ruled that share options must be accounted for against profits. Share options - where employees are given the chance to buy shares at a set price over a period of time - have played a big role in building fortunes in the IT industry.

Cisco wanted to create a market in staff share options by offering some for sale, on the same terms, to institutional investors. But the SEC decided that this approach would undervalue the options.

The statement from SEC chairman Christopher Cox said that various methods of valuing stock options exist and that over time it would become clearer which are best.

The statement says: "We remain committed to the promotion of competition between different approaches. Ideally, that competition will also lead to further innovation in models used to value employee stock options."

More details on the SEC websitehere.