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Lie's Stock-Option Research Hits Canada, Too

American securities regulators are looking into Research In Motion Ltd.'s stock-option practices, the Ontario-based company says. The company's stock-option troubles are the result of an unlikely chain of events that began a few years ago. ERIK LIE, a Norwegian-born business professor at the UNIVERSITY OF IOWA, was hacking away at dry chunks of stock-price data when, as with the first prospector in the Klondike, something caught his eye that would rock the business world. He noticed that executives tended to get options not only when the company's stock was down, but when the stock market as a whole was in a valley. Either corporate directors were psychics who knew when the market was going to go up, or they were backdating options, i.e., picking a favorable date in the past for the options' exercise price, he concluded. Lie's findings attracted the attention of the Securities and Exchange Commission, which began investigating and was soon joined by other government agencies and media organizations. Dozens of probes, lawsuits and resignations ensued.

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