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Canadian regulators are seeking a record fine against Research In Motion's leaders for a backdating scandal that netted them about $1.6 million each.
Research In Motion's co-CEOs, Jim Balsillie and Mike Lazaridis, are under investigation by the Ontario Securities Commission, which is seeking a record $80 million fine for a backdating controversy that stretches back to 1996, according to a report by the Globe and Mail.
The issue came to light in 2007 when RIM's board investigated and found that nearly 40% of stock options granted since 1996 had been backdated. Backdating involves companies retroactively giving employees a stock purchase price that aligns with the stock's low point, instantly creating a gain for the purchase.
The investigation revealed that during that period the co-CEOs acquired about 2 million shares, which earned them about $1.6 million each. Balsillie and Lazaridis repaid the earnings and footed the $4.2 million bill for the investigation. The company then restated its earnings back to 1999, recording about $250 million after-tax expenses because of the backdating.
RIM's report said the investigation "did not find intentional misconduct on the part of any director, officer, or employee responsible for the administration of the company's stock grant program." The backdating issue came at a time when the U.S. Securities and Exchange Commission was scrutinizing a variety of companies, including Apple.
With the tremendous success of the BlackBerry line of smartphones, RIM is worth about $37 billion. Balsillie and Lazaridis could probably afford the fine, as they are estimated to be worth about $2 billion each. But it's unclear if they will pay the fine or contest it, as RIM had no comment when reached by the press.
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