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The U.S. Securities and Exchange Commission filed civil charges Tuesday against Research in Motion (NSDQ: RIMM), its co-CEOs James Balsillie and Mike Lazaridis, former CFO Dennis Kavelman and former VP of finance Angelo Loberto — and announced that it already has accepted a settlement. The complaint alleges that the company and the four execs illegally backdated stock options from 1998 through 2006, claiming the “widespread backdating of options … provided them and other employees with millions of dollars in undisclosed compensation.” In addition to claiming SEC violations, the commission says the Canadian company also violated RIM’s own stock option plan and a listing requirement for the Toronto Stock Exchange. The company and the execs agreed earlier this month to various sanctions and to pay nearly C$77 million to the Ontario Securities Commission.
The SEC settlement calls for civil penalties of $500,000 for Kavelman; $425,000 for Loberto; $350,000 for Balsillie; and $150,000 for Lazaridis. They also must pay back proceeds from the backdating, already covered by payments to RIM totaling just over $843,000; of that, Balsillie paid $334,250 and Lazarides, $328,300. Kavelman and Loberto are banned from serving as officers or directors of any company with securities registered with the SEC or required to file with the SEC, and from practicing before the SEC as accountants for five years.
The complaint also alleges:
— that Kavelman and Loberto took steps to hide the backdating from regulators, RIM’s independent auditor and outside lawyer, and that all four attended a shareholder meeting where Kavelman denied that RIM was backdating options. The 2006 meeting took place at a time when backdating issues were in the spotlight.
— the execs repriced options at substantially lower backdated prices “at times” and that Kavelman and Balsillie agreed to adjust at least one hire’s offer to show backdated prices.
— that they intentionally avoided using the lowest price on some occasions.
Full SEC complaint after the jump…