The issue appears to be related to the K65f180m "flash_demo" project for IAR IDE.
I've run the demo reconfigured for a K26 on our board.
In the demo, we erase a part of the upper pflash block (/w verification) ( 0xFE000 - 0x100000).
Later in the demo, we swap the flash blocks (0,1 -> 2,3).
In our application, erasing any of the first sixteen bytes of the 0xFE000 sector while the SWAP bit of FTFE_FCNFG register is SET causes the FPVIOL flag of the FTFE_FSTAT register to trigger.
I'm not going to put any more time into this as it does not effect our application when we do not run the demo application.
We also do not use the flash swap feature.
Thanks,
Eric