The co-CEOs and two other executives at BlackBerry maker Research in Motion Ltd. have been charged by the Securities and Exchange Commission with tampering with stock options to enrich themselves and other workers, AP reported.
The charges, filed Tuesday by the SEC in U.S. District Court for the District of Columbia and announced with a simultaneous settlement of the case, allege that the executives pulled down millions of dollars in compensation that wasn't properly disclosed to investors.
The practice, known as "backdating," has been investigated at hundreds of companies. It involves tweaking the paperwork so option awards look like they were issued earlier than they actually were, usually on a date when the stock was trading lower. That makes it cheaper for the recipient to cash out the options, and boosts the potential windfall.
It's not illegal if the company records the proper expenses, something RIM didn't do for 1,400 options granted between 1998 and 2006, according to the SEC's filing.
Together, the executives have agreed to pay more than $1.4 million in fines and give back more than $800,000 in profits to settle the SEC's case, the SEC and RIM said Tuesday. The executives had already paid back the profits to RIM.
The charges come two weeks after Ontario's Securities Commission reached its own settlement with Waterloo, Ontario-based Research in Motion. The Canadian case calls for the executives to pay $62 million in fines and in restitution to the company.
The defendants named in the latest case are: RIM's co-CEOs, Jim Balsillie and Mike Lazaridis; Chief Operating Officer Dennis Kavelman, who served as RIM's chief financial officer until stepping down in March 2007 after RIM's internal review uncovered problems with the options practices; and Angelo Loberto, the former vice president of finance who also left that job after RIM's internal review. Loberto has stayed at the company as vice president of corporate operations.
RIM said the company is not required to pay a monetary penalty or give back any profits as a result of the latest settlement.
RIM shares fell $3.87, or 8 percent, to close at $44.64 amid broad market declines.