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SEC OKs Market-Based Options Valuation

Law360 (January 30, 2007, 12:00 AM EST) -- The U.S. Securities and Exchange Commission has approved a market-based system for evaluating employee stock options, marking the first time the agency has favored a market-based model over academic methods.

In a Jan. 25 letter, SEC chief accountant Conrad Hewitt gave financial services firm Zion Bancorp permission to implement its market-based system, which uses stocks to mirror options granted to employees in order to determine the value of the options.

“The SEC staff concurs with your view that the [auction system] is sufficiently designed to be...
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