Latest RIM affidavit targets Balsillie

According to local reports, an affidavit was filed in a Canadian court Thursday, that suggests the pattern of option grants at Research in Motion, is unlikely to be the result of accidental misunderstanding of accounting rules, as claimed by co-CEO Jim Balsillie.

University of Iowa professor Erik Lie – a stock options expert – filed the affidavit claiming that his analysis of the dates selected by RIM to grant options shows they are irregular.

Canadian daily, The Globe and Mail, quotes Lie saying that the options appeared to have “intentionally been set to coincide with particularly low prices”.

In February, professor Lie accused RIM of backdating options. His accusations are serious for the mobile email firm because he has a reputation for being right. His work has led to nearly 200 investigations in the US, and last year he testified on a separate but similar inquiry, heard by the US Senate. He has also acted as a consultant in court cases relating to backdating.

According to The Globe and Mail, Lie’s filing Thursday, is an amended version from a case launched in January, by the Ironworkers Ontario Pension Fund.

The Ironworkers fund is trying to force RIM to change how it conducts internal investigations into its stock option practices. In December the pension fund demanded RIM use independent inspectors to review stock option grants. It alleged that RIM’s directors are not independent because they are too close to the stock option program.

Ironworkers, which owns $2m (£1.01m) worth of RIM shares also asked the Canadian firm to take the investigation away from RIM’s own audit committee. However, last week RIM released that committee’s report which said there was evidence of backdating as professor Lie had alleged. It went on to say that it found no “intentional misconduct” on the part of any employee.

Lie’s latest filing seeks broader investigation of RIM’s option practices and makes further requests for a detailed probe of backdating at the firm.

Balsillie stepped down as chairman after the errors were revealed and insisted that any mistakes were accidental. But the Globe and Mail quotes Lie as saying: “The data show that the frequency at which the grant dates had monthly price troughs is too high for the statement attributed to Mr. Balsillie to be a complete explanation for how the grant dates were determined.

“This suggests that the dates have intentionally been set to coincide with particularly low prices. Thus, the claim Mr. Balsillie is reported to have made is either inaccurate or incomplete.”

RIM’s stock option practices have been under scrutiny for some time. Last year, the US Securities and Exchange Commission (SEC) made an informal inquiry into the company’s practices.

RIM refused to comment on the story and directed to its statement on the matter, written March 5.


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