Paul Atkins, a commissioner at the Securities and Exchange Commission, has copped a fair pasting over his comments that spring loading - where companies grant stock options ahead of good news - are not guilty of insider trading.

Talking to a corporate governance forum last week, Atkins said paying in options was cheaper and that it was good for shareholders because fewer options were granted. In other words, simply timing option awards ahead of expected favorable company news makes good business sense, the SEC commissioner said.

What makes Atkins comments even more extraordinary is that they effectively preempt the SEC inquiry into the timing of stock option grants where executives would benefit from good news. On first impressions, it does not pass the smell test.

Atkins has come under attack following his comments.

Atkins seems to be in the "camp of the willfully oblivious", says Bloomberg's Graef Crystal.

According to Crystal, Atkins seems to be living in a different world that's divorced from the realities of the market. By allowing executives to take advantage of the information only they have, it effectively robs shareholders of what is rightfully theirs.

And in any case, he says, measuring true dilution is more complicated than the picture the SEC commissioner presents. It's measured not by the gross number of shares granted, but by the net shares remaining after using the executive's proceeds and the value of the company's tax deduction to repurchase shares from the open market. And that's critical because by granting an option at a lower price, you are increasing the likelihood of higher appreciation, and therefore higher net dilution. So much for the argument that it's good for shareholders.

It almost makes you wonder what Atkins considers the SEC's brief to be. Is it about protecting shareholders, or is it about increasing the wealth of the management of companies, says the Capunchinomics newsletter.

Go figure!