A SEC news release said Ontario, Canada-based RIM agreed to a court order barring it from any further securities laws violations relating to options dating practices; regulators said RIM’s settlement was reached after consideration of the company’s cooperation during U.S. regulators’ investigation.
Also reaching SEC settlements were RIM former Chief Financial Officer Dennis Kavelman, former Vice President of Finance Angelo Loberto, and Co-Chief Executive Officers James Balsillie and Mike Lazaridis. The SEC said the four illegally granted undisclosed, in-the-money options to RIM executives and employees by backdating millions of stock options from 1998 through 2006.
All four individual defendants agreed to an order barring them from further U.S. securities laws violations relating to options backdating practices. Kavelman and Loberto agreed to be barred for five years from serving as officers or directors of any company with SEC-registered securities or that is required to file SEC reports, the announcement said.
The SEC said Balsillie and Lazaridis also agreed to an order prohibiting them from further securities laws violations.
Finally, the SEC said it had levied the following fines and required the following disgorgement of the in-the-money value of backdated options the defendants had exercised:
- Kavelman: $500,000 fine, $132,914.60 disgorgement.
- Loberto: $425,000 fine, $47,950.56 disgorgement.
- Balsillie: $350,000 fine, $334,250 disgorgement.
- Lazaridis: $150,000 fine, $328,300 disgorgement.
"As alleged in our complaint, RIM and its highest level executives engaged in widespread backdating of options which provided them and other employees with millions of dollars in undisclosed compensation," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement, in the SEC announcement. "This enforcement action underscores the SEC's resolve to assure full and accurate disclosure to U.S. 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."
On February 5, 2009, the Ontario Securities Commission brought a related settled action against RIM, Balsillie, Lazaridis, Kavelman, Loberto, and certain other directors which included the total payment in Canadian dollars of $76.85 million and other sanctions (see Blackberry Maker Settles Options Backdating Case ).