From the Los Angeles Times

Wall Street roundup

May 9, 2008

Marvell to settle SEC options suit

Semiconductor maker Marvell Technology Group on Thursday agreed to pay a $10-million civil fine to settle regulators' allegations of improper backdating of stock options.

The Santa Clara, Calif., company did not admit or deny wrongdoing in settling with the Securities and Exchange Commission. The agency sued Marvell, alleging that it failed to disclose the employee stock-option awards as expenses and backdated the options to dates with lower stock prices.

The backdating scheme allowed the company to overstate profit by $362 million for fiscal years 2000 through 2006, the SEC lawsuit alleged.

In addition, Marvell co-founder and former Chief Operating Officer Weili Dai, accused of falsifying minutes of phantom meetings, agreed to pay a $500,000 civil fine and to be barred for five years from serving as an executive or director of any public company. She also neither admitted nor denied the SEC's allegations.

Backdating options make the rewards even more lucrative by retroactively setting the exercise price to a low point in the stock's value. Usually, a stock option's exercise price coincides with the market value at the time of a grant to give the recipient an incentive to drive the price higher.

If companies backdate options without properly disclosing and accounting for the move, it can cause profits to be overstated and taxes to be underpaid.

Retirement savings grow 7%

The retirement assets of Americans grew 7% to $17.6 trillion last year, with the strongest growth coming from worker contributions to 401(k) accounts and other company-sponsored plans and to individual retirement accounts.

The Investment Company Institute, a trade association, said Americans held $4.5 trillion in defined-contribution plans such as 401(k)s at year's end and $4.7 trillion in IRAs. The balance was $8.4 trillion in traditional pension plans, government employee plans and annuities, the institute said.

In 2006, retirement assets grew 11% to $16.5 trillion. Of the total, $4.1 trillion was in defined-contribution plans and $4.2 trillion in IRAs.

Brian Reid, the institute's chief economist, said last year's slower growth mainly reflected weaker markets. The Standard & Poor's 500 index advanced just 3.5% last year compared with 16% the previous year.

Reid said he was impressed that the $1.1-trillion growth in retirement assets last year represented about half of the total growth in household wealth in the year, according to Federal Reserve figures.

WCI shares drop on dismal outlook

Shares of WCI Communities Inc., a Florida home builder whose chairman is billionaire Carl Icahn, fell to the lowest level in almost four months after brokerage Raymond James cut its rating and said the company might have to file for bankruptcy protection.

WCI tumbled 22 cents, or 8.4%, to $2.40 on Thursday, the lowest since Jan. 11. The shares touched $2.10 during trading.

"We believe bankruptcy risk is now a likely potential outcome," Raymond James analyst Paul Puryear wrote in a report. "In our view, time is not on WCI's side and the clock is ticking loudly."

From Times Wire Services