Shareholders are putting up some big numbers on the board for stock options backdating claims. Broadcom has reached a proposed settlement in the stock options backdating derivative action filed against it. The $118 million settlement is subject to approval by United States District Judge Manuel Real in the Central District of California.
This settlement would be the second largest derivative action for stock options backdating, after the estimated $900 million settlement in the UnitedHealth Group Inc. backdating action in 2007.
Broadcom's shareholders claimed that individual defendants issued false and misleading statements to the Securities and Exchange Commission (SEC) for their own gain. The defendants are alleged to have manipulated the stock options for a period of ten years from 1997 to 2007. They ultimately were required to restate earnings downward in the amount of $2.2 billion.
The settling defendants include both current and former officers and directors, as well as Broadcom's former general counsel. These defendants deny wrongdoing as part of the settlement.
The settlement payment is to be covered by individual defendants' directors and officers liability insurance coverage. Plaintiffs' attorneys' fees and expenses in the amount of $11.5 is to be paid by Broadcom.
Several high-profile individuals are not part of this settlement. Those include former chief financial officer William Ruehle, co-founder and former chief executive Henry Nicolas, as well as co-founder Henry Samueli. Federal prosecutors filed criminal cases against Ruehle and Nicolas for stock options backdating. Samueli pled guilty last year for his role in making a false statement to the SEC.
This settlement stays a related shareholder class action against Broadcom pending the criminal trials against Ruehle and Nicolas.
Related Web Resources
If you would like to learn more about stock options backdating, visit the SEC's website.
If you would like more information on stock options backdating claims or securities and commodities litigation, please contact Gusrae, Kaplan, Bruno & Nusbaum, PLLC.
