Four Research In Motion (RIMM) executives have settled Securities and Exchange Commission charges over stock-option backdating.
The SEC Tuesday alleged that CFO Dennis Kavelman, former VP of Finance Angelo Loberto and co-CEOs James Balsillie and Mike Lazaridis “illegally granted undisclosed, in-the-money options to RIM executives and employees by backdating millions of stock options over an eight-year period from 1998 through 2006.” 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 SEC also asserts that Kaveman and Loberto took steps to hide the backdating from regulators, the company’s auditor and its outside lawyer.
Kavelman and Loberto agreed to a 5-year bar on serving as an officer or director of any company that files reports with the SEC.
All defendants agreed to settle the matter, without admitting or denying the allegations.
RIMM consented to an order permanently enjoining the company from violating the antifraud, reporting, books and records and internal controls provisions of the federal securities laws.
This process makes the granted option in-the-money and of value to the holder.
This process occurred when companies were only required to report the issuance of stock options to the SEC within two months of the grant date.