Human Capital & Careers

Small Company Touched by Options Scandal

An internal probe at Boston Communications could spur a restatement and delay the company's quarterly report.
Stephen TaubAugust 15, 2006

The options-pricing scandal has spread to even the most diminutive public companies. Boston Communications Group, a $39 million market cap company which sells billing systems to mobile phone companies, reported that it may need to restate previous results after an internal review found that it’s likely that the actual dates for certain stock option grants will differ from grant dates that had been recorded.

As a result, the company will probably be required to report added non-cash charges for stock-based compensation expense tied to those prior periods. Boston Communications warned the impact could be material.

The company also stated that it may be required to pay additional taxes for compensation associated with certain previously exercised stock options. It also may not be able to take additional deductions associated with certain stock options in future periods.

Because of the options inquiry, Boston Communications will also be unable to file its quarterly report for the quarter ending in June until it has “substantially completed” its review of its stock practices.

The company had previously disclosed that the Securities and Exchange Commission had launched an informal inquiry relating to certain option grants made between 1998 and 2002.

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