D&O Insurers Fund $118 Million Partial Settlement of Broadcom Options Backdating Derivative Suit

D&O Insurers Fund $118 Million Partial Settlement of Broadcom Options Backdating Derivative Suit - 9/1/2009

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

SETTLEMENT NEWS:

D&O Insurers Fund $118 Million Partial Settlement of Broadcom Options Backdating Derivative Suit
Kevin LaCroix

The D & O Diary. September 1, 2009
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EXCERPT: In what is one of the largest ever shareholders’ derivative lawsuit settlements, the parties to the consolidated federal options backdating related derivative lawsuit involving Broadcom Corp. have agreed to settle the case for $118 million, to be funded entirely by the company’s D&O insurance carriers. The settlement does not include the company’s co-founders, Henry Samuels and Henry T. Nichols, III, against whom the suit will continue. As discussed below, the settlement has a number of interesting features, including certain details surrounding the insurers' settlement participation, particularly the substantial participation in the settlement of Broadcom's Excess Side A insurance carriers. As reflected in Broadcom’s August 28, 2009 filing on Form 8-K, and the accompanying stipulation of settlement, the $118 million settlement, which is subject to court approval, is to be funded by the company’s D&O insurers and includes $43.3 million that "Broadcom had already recovered in connection with prior reimbursements from its insurers (subject to a reservation of rights that will be released upon settlement approval." The stipulation also provides that in connection with the settlement Broadcom will pay plaintiffs’ attorneys’ fees and costs of $11.5 million. There are a number of interesting things about this settlement. The first is its size. The settlement’s total value of $118 million would make this the second largest options backdating related derivative lawsuit settlement, exceeded only by the $900 million UnitedHealth Group options backdating derivative settlement. Indeed, the $118 million settlement may be among the largest shareholders’ derivative settlements of any kind, exceeded or equaled only by a small handful of prior derivative settlements (including, in addition to the UHG settlement noted above, the $115 million AIG derivative settlement and the $122 million Oracle derivative lawsuit settlement).

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