The Securities and Exchange Commission today brought civil charges against two current and two former executives of Broadcom in the stock-options backdating case against the chip maker.
“The SEC alleges that, through this scheme, the four officers made it appear that the options were granted at times corresponding to low points of the closing price of Broadcom’s stock — despite the fact that the purported grant date bore no relation to when the grant was actually approved. This resulted in artificially and fraudulently low exercise prices for those options. The SEC also alleges that the unrecorded compensation expenses and hidden backdating practices led Broadcom to provide false and misleading disclosures to Broadcom’s shareholders in filings with the SEC through 2005,” the commission stated.
Facing the civil charges are Henry Samueli, Broadcom’s chairman and CTO; Henry T. Nicholas III, the company’s former president and CEO; William Ruehle, its former CFO; and David Dull, the chip maker’s SVP and general counsel.
Broadcom recently agreed to pay $12 million to settle the SEC’s charges against the company for covering up more than $2 billion in expenses for stock options that should have been charged against the company’s earnings over a period of five years.
Another chip maker, Marvell Technology Group, has also settled its backdating case with the SEC, paying a penalty of $10 million.
The SEC acknowledged the assistance of the U.S. attorney’s office for the Central District of California and the FBI in building the civil case against the Broadcom Four. Stay tuned to see if federal criminal charges follow.
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