Research In Motion executives have agreed to pay $1.4 million in fines to settle a complaint brought by the U.S. Securities and Exchange Commission related to the BlackBerry maker's backdating of stock options.
Fellow CEOs Jim Balsillie and Mike Lazaridis, along with former CFO Dennis Kavelman and former vice-president of finance Angelo Loberto, agreed to pay the penalties to settle the case. The settlement comes two weeks after RIM agreed to pay nearly $75 million in fines and reimbursements to settle with the Ontario Securities Commission.
RIM said in a press release that Balsillie and Lazaridis "consented, without admitting or denying allegations in the complaint filed by the SEC."
Backdating involves assigning earlier issue dates and prices to stock options to generate a higher value for the person holding the options. Backdating is not always illegal, if properly disclosed, but the practice is against the rules of the Toronto Stock Exchange, where RIM's shares are listed.
The OSC said that the backdating, which took place at RIM between 1996 and 2006, generated an improper gain for employees of about $53.65 million. The regulators said RIM has offset about half of that through repayments and canceled or forfeited options.
A special committee of RIM's corporate board determined in 2007 that the company had backdated 40 percent of its stock options granted to employees since 1996. The committee also found that 12 of the 16 option grants given to the two chief executives from 1996 through 2006 had been issued using an incorrect date. At the time, the committee said that the options grants were used to purchase 2 million shares, and that the estimated value to the two executives was about $1.6 million, which they have since paid back to the company.
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