Events in the Broadcom backdating case
Broadcom timeline Stock options, typically used as incentive pay, allow employees to buy stock in the future at current prices. Broadcom Corp. and other companies also backdated the options to a previously lower price to give employees a little extra when they cashed in the options. Backdating was legal as long as the expense was disclosed publicly. Here are events in Broadcom’s backdating case:2006 May 18: A report by the Center for Financial Research and Analysis, representing institutional investors and others, finds Broadcom “at risk” for having backdated option grants during the five-year period that ended in 2002.May 25: Broadcom is sued by shareholders over allegedly improper options grants.June 12: Broadcom acknowledges a probe by the Securities and Exchange Commission focusing on its options grants.Sept. 19: Chief Financial Officer William J. Ruehle leaves.Nov. 27: A former administrative assistant for co-founder Henry T. Nicholas III, the former chief executive, alleges in a lawsuit that Nicholas required him to oversee supplies of cocaine and other drugs, pay prostitutes from a “petty cash” fund and conceal his boss’ “extracurricular activities.”Dec. 18: Broadcom acknowledges that former executives picked the grant dates for stock options “after the fact” in apparent violation of accounting rules. The SEC elevates its inquiry to a formal investigation.2007 Jan. 23: Broadcom restates earnings to take a $2.2-billion noncash charge and says Nicholas bore “significant responsibility” for improperly backdated stock options.Nov. 30: A former executive, Nancy Tullos, agrees to plead guilty to obstruction of justice for instructing a subordinate to delete a damaging e-mail, which prosecutors alleged had provided evidence of stock manipulation by senior executives, including Nicholas and co-founder Henry Samueli.2008 April 22: Broadcom agrees to pay $12 million to settle allegations against the company that its top executives backdated stock options.May 14: The SEC files a new lawsuit against Samueli and Nicholas accusing the co-founders of systematically backdating 232 million options to make them more valuable, then hiding the fact from shareholders.June 5: In a 21-count indictment, Nicholas and Ruehle are accused of improperly backdating millions of Broadcom stock options for five years to reward employees. Nicholas faces a second indictment alleging “using and distributing controlled substances,” including cocaine and methamphetamine.June 23: Samueli pleads guilty to lying to federal regulators about backdating in a deal that would let him pay $12 million and be sentenced to probation instead of prison, but the judge rejects the deal as too lenient. Samueli, who also owns the Anaheim Ducks, is suspended by the National Hockey League.2009 Sept. 24: A federal appeals court panel refuses to reinstate a proposed plea bargain that guaranteed Samueli that he would spend no time in prison.Nov. 12: The NHL reinstates Samueli.Dec. 9: U.S. District Judge Cormac J. Carney clears Samueli, saying that the executive’s statements to regulators were “ambiguous and evasive” but not materially false, and therefore not a crime.Dec. 15: Carney dismisses both federal criminal and civil securities fraud charges against Samueli, Nicholas and Ruehle. Drug charges against Nicholas are still pending. Source: Times research
