The Securities Lawyer Blog has posted twice on the Broadcom backdating case -- and now we have news from the Securities and Exchange Commission (SEC).
Reviewing the history of this matter, we first posted in September 2009 that the company settled the derivative action for $118 million and again in December 2009 when Judge Cormac Carney entered an acquittal and dismissal against former executives.
Last week, the SEC announced its intention not to proceed with its civil action, which had been stayed at the United States Attorney's request pending the criminal trial.
The SEC's initial civil action was filed in May 2008, in the United States District Court for the Central District of California. In that case, the Commission alleged that Henry T. Nicholas III, Henry Samueli, William J. Ruehle, and David Dull, who were current or former officers of Broadcom, had been involved in a scheme to backdate stock options over a period of several years.
Judge Carney entered an acquittal in Ruehle's criminal trial last December and dismissed the stock option backdating indictment against Nicholas. The judge expressed deep concerns about the U.S. Attorney's conduct in the matter. He also dismissed the SEC's complaint without prejudice. The Commission was discouraged from pursuing its action.
Last month, after the SEC sought clarification of the dismissal order, the court indicated that the SEC's action would not survive summary judgment given the evidence presented in Ruehle's criminal trial and the preclusion of testimony of Broadcom's former vice president of human resources. After consideration, the Commission announced last week its intention not to proceed further.
Federal prosecutors have filed a notice of appeal for the dismissal of the case against Nicholas. Some have questioned the wisdom of Broadcom's settlement in the derivative action given these dismissals. But it appears, at least for now, that the storm is over for Broadcom and its former executives, $118 million dollars later.
Related Web Resources
To read more about the Broadcom case go to the Orange County Register.
Contact the New York City securities law firm Gusrae, Kaplan, Bruno & Nusbaum, PLLC for securities litigation, regulatory enforcement representation and related issues and matters.
