Broadcom, insurers reach lawsuit deal
Insurers have agreed to pay $118 million to settle a federal lawsuit accusing Broadcom Corp. officials of mismanagement and unjust enrichment through the misdating of stock options.
The settlement doesn’t cover co-founders Henry Samueli and Henry T. Nicholas III.
Broadcom disclosed the agreement with its providers of insurance covering corporate officers and directors in a Securities and Exchange Commission filing Friday.
The accord would settle a lawsuit brought by investors on behalf of the Irvine microchip firm, whose $2.2-billion restatement of its financial results in January 2007 was the largest by a U.S. company in a wave of option-misdating scandals.
The money from the insurers would be paid to Broadcom, which agreed to pay $11.5 million to plaintiffs’ attorneys in the case.
The agreement covers claims against 10 current and former Broadcom officers and directors named as defendants in the federal lawsuit, along with several others named in a state court action.
The defendants admitted no liability. Broadcom, which has spent more than $100 million on legal fees related to the options, said it wanted to avoid additional costs.
The settlement does not cover potential liabilities in the case of Samueli, who was Broadcom’s chairman; Nicholas, who was chief executive; or former finance chief William J. Ruehle. Richard Heimann, the lead lawyer for the investors, said he would continue to pursue claims against the three former executives.
Nicholas and Ruehle are awaiting trial in U.S. District Court in Santa Ana on criminal charges related to improperly backdated options, and Samueli has pleaded guilty to lying to SEC investigators.
The settlement must be approved by a judge before it can be implemented.
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