Research in motion stock option backdating elucidating the mechanism of cellular uptake and


26-May-2017 10:33

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.

Kavelman and Loberto consented to an order "permanently enjoining them from violating the antifraud, internal controls, books and records and misrepresentation to auditors provisions and from aiding and abetting RIM's violations of the reporting, books and records and internal controls provisions of the federal securities laws." Kavelman also consented to an order permanently enjoining him from violating the certification provision of the federal securities laws.

As with the SEC settlement, Kavelman is barred from working as a director or officer of any public Canadian company for five years in the terms of the OSC settlement.

Also, Loberto must complete an OSC-approved course on the duties of directors and officers of public companies before he can again act in that capacity.

Therefore you go from paying 23 per cent tax on your gain to paying 46 per cent on your gain.” Something else to consider about backdating stock options.

According to Alan Ellman of Labaton Sucharow LLP, “unlike the typical securities fraud scenario, options backdating places the general counsels at the center of the fraudulent conduct.” Ellman adds: The general counsel is essential to the creation of the stock options award plan; explains the rules of the plan to management; prepares stock option grant documents, such as unanimous written consents, which directors use to formally approve option grants; files forms with the U. Securities and Exchange Commission acknowledging the grants; and signs proxy statements which generally state that options are granted at the fair market value of the stock on the date of grant.

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Kavelman and Loberto are also prohibited for five years from serving as officers or directors of any company which is required to file reports with the SEC.

So for those companies stupid enough to backdate not only inevitably do they seem to get caught, witness Research in Motion, but more importantly, Canadian resident employees subject to the Canadian , end up with far more adverse tax treatment due to backdating than would be the case if they had the options priced at a conventional basis at market when the share were issued. If you are an employee of a public company and that company gives you options for 10,000 shares and the market price today is .00 per share, you can exercise these options at .00.