More is going on in the financial statement and stock options grants at RIM. I am trying to read more from the commission on this. The testimony from commission chair is interesting.

RIM stock option review slowed by paper chase TGAM 18 Dec 2006 JANET MCFARLAND

The company said it made 3,200 option grants to more than 2,000 employees between 1996 and 2006, so the volume of documents to be analyzed is substantial. In total, RIM has identified 650,000 electronic documents that needed to be reviewed, and has examined more than 500 employees’ files.

A lawyer acting for RIM’s audit committee, which is conducting the internal option review, told an OSC hearing Monday the company expects to take a charge that will be “significantlyâ€? higher than the $25-million to $45-million (U.S.) amount it has previously identified.

[...]

As part of its study, RIM said it searched its computer servers to find documents involving “persons of interest� in the review, and conducted the same search of historic electronic directories on back-up disks.

It also searched the hard drives of certain employees’ computers, the company said. The company said it is also interviewing a number of witnesses as part of the investigation.

RIM sees larger charge NP FP 19 Dec 2006 Theresa Tedesco

In a written submission to the OSC yesterday, the company said the internal probe is examining electronic and written documents, including stock options, of more than 500 employees, including the computer hard drives “of persons of interest.”

According to the eight-page letter, RIM’s “audit committee is working diligently and as quickly as possible to complete the review and restatement and to permit RIM to become current in its reporting status.”

As a result, an OSC panel yesterday extended a ban prohibiting about 66 officers and directors of RIM, including co-CEOs Michael Lazaridis and James Balsillie, from trading any shares until all of its filings are up to date.

Review could further trim RIM’s profits TS 19 Dec 2006 Tara Perkins

The company has reviewed more than 500 employees’ human resources and stock-options files, which are on paper.

For “persons of interest,” it has also searched through its electronic directories and computer hard drives for certain key words. The letter did not identify the “persons of interest,” but RIM said it has disclosed the search terms to the OSC.

The review is taking longer than initially thought. RIM expected to turn up about 400,000 electronic documents, but has now identified 650,000, after going through back-up disks using forensic imaging.

Testimony Concerning Options Backdating 6 September 2006 Christopher Cox Chairman, U.S. Securities and Exchange Commission
Before the U.S. Senate Committee on Banking, Housing and Urban Affairs

There are many variations on the backdating theme. But here is a typical example of what some companies did: They granted an “in-the-money” option-that is, an option with an exercise price lower than that day’s market price. They did this by misrepresenting the date of the option grant, to make it appear that the grant was made on an earlier date when the market value was lower. That, of course, is what is meant by abusive “backdating” in today’s parlance.

The purpose of disguising an in-the-money option through backdating is to allow the person who gets the option grant to realize larger potential gains-without the company having to show it as compensation on the financial statements.

Rather obviously, this fact pattern results in a violation of the SEC’s disclosure rules, a violation of accounting rules, and also a violation of the tax laws.