A former vice-president of Research In Motion Ltd. has "categorically denied" allegations that he improperly bought shares of Certicom Corp. after allegedly learning at a company golf event that RIM was interested in buying the company.
Paul Donald, former vice-president at a RIM division known as Code Division Multiple Access, said he was not involved in discussions about Certicom and did not know about the takeover talks.
Mr. Donald was responding to allegations Thursday from the Ontario Securities Commission that he made a profit of $295,000 after buying 200,000 shares of Certicom in 2008 before RIM announced a takeover bid for the company.
According to an OSC statement of allegations, Mr. Donald attended a RIM golf and dinner function on Aug. 20, 2008, and sat a table with various company officials including vice-president Chris Wormald, who told him RIM had been in talks with Certicom about a possible acquisition. The OSC said Mr. Wormald revealed that RIM felt the encryption security company's share price was "dramatically undervalued."
"On the following day, Aug. 21, 2008, Mr. Donald began purchasing securities of Certicom," the OSC alleged. "Donald had never before purchased Certicom securities."
RIM launched a hostile takeover bid for the company in December, 2008, and entered into a deal to buy the company in February, 2009.
The OSC alleged that Mr. Donald received proceeds of $600,000 for his shares on March 26, 2009, through RIM's offer to acquire all the outstanding shares of the company. The commission alleged that he earned a profit of $295,000 on the deal, and accused him of buying the shares "with knowledge of material facts about Certicom that had not been generally disclosed" and acting "contrary to the public interest."
Mr. Donald, however, said he worked at RIM only two days a week in the summer of 2008 and was unaware of the takeover plans.
"On Aug. 20 I had a casual conversation with a colleague at a golf course in which we discussed companies that we thought were undervalued," Mr. Donald said in a statement released late Thursday.
"My colleague at no time suggested to me that he was 'a person in a special relationship' with Certicom or that RIM had been in confidential discussions with Certicom. I did not and do not believe our discussion involved any material information about any of the companies we discussed."
In a statement Friday, RIM said it learned Mr. Donald had purchased Certicom shares in December, 2008, as it was preparing its takeover bid, and launched an internal investigation. The company said it reported its findings to the OSC.
"RIM and RIM personnel also co-operated with OSC staff in connection with the OSC's subsequent investigation," the company said.
RIM said Mr. Donald has not been employed at the company since March, 2009.
Mr. Donald's lawyer, Kevin Richard, questioned the logic of the OSC charges, saying if an insider of RIM had passed along alleged insider information about a takeover bid, he would have had an obligation to advise Mr. Donald the information was material and confidential or could be accused of illegal "tipping" of insider information.
"If a fact was material and was passed on without a proper warning, I would expect a tipping allegation to be made," Mr. Richard said.
No other RIM officials have been named in the case. In its statement Friday, RIM said it does not expect any further action by the OSC against any other RIM employees.
The OSC has scheduled a hearing in the case for June 7.