Who leaked RIM's purported $100 million OSC fine?

– updated Jan. 28, 2009 –

News item: “Securities watchdog pursues record fine for RIM execs”

Perhaps it is the wrong question to ask, but who leaked the $100MM Research in Motion (RIM:TSX, RIMM:Q) fine story to the print media last week? The original articles appeared in the January 22nd edition of the DTM (keep that date in mind).

The fact that both the Globe and Mail and the OSC might benefit from the leak only adds to the mystery. (An earlier version of the post erred in suggesting that the National Pest got the leak at the same time as the Globe. Although both had the same dateline of January 22nd, the Globe’s story made the print edition; thus my confusion. TT, the Pest’s resident Libelist, began to chase the the story only after the Globe did their splash. My apologies to the scoopers at the DTM for getting that wrong in an earlier version of this post.)

But whose side leaked the story?

For the folks at RIM, there are a few reasons to have the story slip into the market:

#1. The news of a big fine might ultimately have less of an impact on the share price if it comes out via an unnamed source, far before any ultimate assessment is made.

#2. If they are trying to get the figure down to something more sane, like the sub-$10MM that Andy Willis has in mind, RIM’s team could be hoping that public uproar about the outsized figure would get the OSC to back off a bit.

For the OSC to have leaked it, you have to consider the fact that on January 23rd, the very day after the $100MM RIM fine leaked, the OSC announced that it had appointed Tom Atkinson to be the new head of enforcement as of February 9, 2009 (almost two and a half weeks later).

I love the timing of the two events, if only because it adds to the intrigue surrounding the RIM fine leak. Who would have known the timing of the Atkinson appointment? Likely only certain OSC staff, and probably not anyone on the RIM side of the street. According to the DTM, the settlement discussions aren’t new:

“sources said the regulator began negotiating a potential settlement last fall.”

Which doesn’t necessarily make it an organized and intentional OSC leak, after all, at least not from the top of the organization. But it does make the timing all the more curious. According to a spokeswoman for the OSC: “We can’t comment on enforcement cases.”

Is that the same thing as “we don’t formally comment on enforcement cases, nor do we leak details of enforcement cases, either”?

If you’ve been beavering away on this file in the OSC enforcement division since 2006 and had heard that the new guy was about to be appointed, you might fear that he’d get all the credit for the $100MM fine. Isn’t the best way to avoid credit going where you think it shouldn’t is to put the story out there before Mr. Atkinson was formally appointed?

The other concept would be for the senior thinkers at the Commission to want to separate the RIM fine file from the new enforcement head. Although I’m not sure why you’d want to undercut the “we have a strong enforcer in place” storyline by separating Mr. Atkinson for the biggest penalty in OSC history, one way to do that would be to tell the market — by leaking the rumoured fine — that the OSC was a tough place even before the new guy showed up. That was ceratinly accomplished last week, even if there are many other situations that still cry out for attention (see prior posts “Canadian gumshoes ignore fraud & billions in losses” February 3-08 and “Cuomo takes action against Citigroup, while ABCP buyers wait in vain” August 2-08).

If it was Jimmy’s PR strategy at work, the OSC will be that much more cross with him now for trying to turn public opinion against their attempted record-setting figure. I’m not a fan of enforcement via media leak, so let’s hope it wasn’t an OSC-driven effort; rogue or otherwise.

Only the journalists at the Globe know for sure, but the leak was clearly intentional. The fact that the DTM did a follow-up story the following day “Meet the go-getters going hard after RIM” is also worth noting. In that story, the following excerpt will catch your eye:

“Leading the [RIM] case is the Ontario Securities Commission’s Sasha Angus, who has earned a reputation as a crusading and prickly regulator during his two years as a special adviser to the OSC’s chairman and before that as director of enforcement at the British Columbia Securities Commission. Mr. Angus is believed to be a candidate for the top enforcement job.”

A few hours later, the OSC released the news of Mr. Atkinson’s appointment to the top enforcement post. Hmmmm, indeed.

MRM
(disclosure – I own RIM)