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 complaint further 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.
RIM consented to the entry of an order permanently enjoining it from violating the antifraud, reporting, books and records and internal controls provisions of the federal securities laws.
(RIM's stock is listed on both the NASDAQ Stock Market and the Toronto Stock Exchange.) Specifically, the SEC's complaint alleges that Kavelman, Loberto, Balsillie and Lazaridis backdated option agreements and offer letters, which concealed the fact that the options were granted in-the-money.
The complaint also alleges that Kavelman and Loberto took steps to hide the backdating from regulators, RIM's independent auditor and outside lawyer.
Canadian handset maker Research In Motion has been accused of backdating hundreds of thousands of stock options to make them more lucrative for company executives, by an American professor.
Professor Erik Lie, whose work has led to nearly 200 investigations in the US, says in an affidavit “I believe that backdating has taken place here”.
The Securities and Exchange Commission today charged Black Berry maker Research in Motion, Ltd., and four of its senior executives for stock option backdating.
"This enforcement action underscores the SEC's resolve to assure full and accurate disclosure to U. investors by foreign issuers." Antonia Chion, Associate Director of the SEC's Division of Enforcement, added, "Companies and executives who attempt to conceal their fraudulent conduct from investors and regulators will be held accountable." The SEC's complaint alleges that RIM and its execs made false and misleading disclosures about how RIM priced and accounted for options.
In addition, according to the complaint, the backdating violated the terms of RIM's stock option plan and a listing requirement of the Toronto Stock Exchange.
It alleges that RIM’s directors are not independent because they are too close to the stock option program.
Ironworkers, which owns m (£1.01m) worth of RIM shares, asked the Canadian firm to take the investigation away from RIM’s own audit committee.