The Securities and Exchange Commission (SEC) charged two current and two former top officers of Broadcom for their alleged participation in a five-year systematic scheme to secretly backdate stock options granted to virtually all Broadcom officers and employees.
The SEC alleges that Broadcom’s former CEO Henry T. Nicholas, chairman and CTO Henry Samueli, former CFO William J. Ruehle, and general counsel David Dull perpetrated a scheme from 1998 to 2003 to fraudulently backdate stock option grants, failing to record billions of dollars of compensation expenses and falsifying documents to further the fraud. As a result of the scheme, Broadcom restated its financial results in January 2007 and reported more than $2 billion in additional compensation expenses.
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.
For the various charges of federal securities laws, the SEC is seeking permanent injunctions, civil monetary penalties, and officer-and-director bars against each of the individuals, disgorgement with prejudgment interest against Ruehle and Dull, and reimbursement of bonuses and profits from stock sales from Nicholas and Ruehle.http://www.sec.gov/
