SEC drops options-backdating suit against 4 Broadcom figures
The Securities and Exchange Commission on Thursday dropped a stock-options backdating lawsuit against four Broadcom Corp. figures, the latest legal victory for the Irvine chip company.
SEC attorney Molly M. White said the commission chose not to pursue the litigation against Broadcom co-founders Henry Samueli and Henry T. Nicholas III and two former executives “after careful consideration” of comments that a judge made about the case at a hearing in January.
The lawsuit, filed in 2008 in the Santa Ana federal courthouse, had sought civil penalties against the men for failing to disclose that they had backdated stock-option grants. In the midst of the federal investigation, Broadcom restated its earnings to account for $2.2 billion in previously undisclosed options expenses.
Samueli, Nicholas and William J. Ruehle, the company’s former chief financial officer, had faced criminal charges related to the company’s options policies. U.S. District Judge Cormac J. Carney dismissed those criminal charges against the three in December, citing questions about the case and alleged witness tampering by a prosecutor.
David Dull, the company’s former legal counsel, was not charged criminally but had been named as a defendant in the civil lawsuit.
Last month, acting at the request of federal prosecutors, Carney dismissed additional criminal charges that Nicholas had supplied drugs to business associates. At that hearing, he expressed concern about the SEC’s lawsuit.
Prosecutors have filed papers indicating that they intend to appeal Carney’s dismissal of the criminal options charges against Nicholas and Samueli.
