WASHINGTON (CN) – The SEC charged today four top officers of BlackBerry-maker Research in Motion with backdating millions of dollars worth of stock options for themselves and others for 8 years, and concealing it from investors. Charged were co-CEOs James Balsillie and Mike Lazarids, former CFO Dennis Kavelman and former vice president of finance Angelo Loberto.
The SEC claims the executives made false and misleading disclosures about how RIM priced and accounted for options, and violated terms of RIM’s stock option plan and a listing requirement of the Toronto Stock Exchange. RIM’s stock is listed on both the NASDAQ Stock Market and the Toronto Stock Exchange.
The SEC said in a statement that Kavelman, Loberto, Balsillie and Lazaridis backdated option agreements and offer letters, and concealed that the options were granted in the money. It claims Kavelman and Loberto tried to hide the backdating from regulators, RIM’s independent auditor and outside lawyer. Kavelman and Loberto picked low strike prices within reporting periods and in some instances avoided the lowest price so regulators would not detect the backdating, the Commission claims. And it claims that Kavelman asked a manager not to document improper pricing in e-mails.
In an ill-advised email, the SEC says, Kavelman wrote, “FYI, it is a major breach of protocol to be discussing (and documenting via email) using option pricing other than that allowable by the Ontario Securities Commission and the SEC in the US.”
The SEC complaint alleges that after all four executives were aware of backdating issues that had come to light at other companies, they attended RIM’s July 2006 annual shareholder meeting, where Kavelman misled investors by denying that RIM was backdating options.
All four agreed to settle the complaint, though none of them admitted they did anything wrong.
Kavelman will pay $500,000 in fines, Loberto $425,000, Balsillie $350,000 and Lazaridis $150,000, the SEC said.
They also disgorged ill-gotten gains, the agency said: $132,914.60 for Kavelman, $47,950.56 for Loberto, $334,250 for Balsillie and $328,300 for Lazaridis.
On Feb. 5, the Ontario Securities Commission settled a similar complaint against RIM, Balsillie, Lazaridis, Kavelman, Loberto and other directors, which included total payment of $76.85 million in Canadian dollars and other sanctions.