Broadcom Settles Stock Options Backdating Claims for $118 Million

Broadcom Settles Stock Options Backdating Claims for $118 Million - 9/1/2009

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

SETTLEMENT NEWS:

Broadcom Settles Stock Options Backdating Claims for $118 Million
Amanda Bronstad

Law.com. September 1, 2009
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EXCERPT: Broadcom Corp. has agreed to pay $118 million to settle allegations of stock options backdating, in one of the largest such deals in a derivative action to date. The proposed settlement, subject to approval by U.S. District Judge Manuel Real of the Central District of California, would be the second largest in a derivative action involving stock options backdating, according to lead plaintiffs counsel Richard Heimann, name partner at San Francisco's Lieff Cabraser Heimann & Bernstein. The largest, reached in 2007 between several pension funds and former executives of UnitedHealth Group Inc., was worth an estimated $900 million. "It is significantly beyond in terms of actual dollar value what most if not all the derivative cases have settled for," Heimann said of the Broadcom deal. "The restatement in this instance was well in excess of $2 billion, meaning they had understated expenses and overstated revenues for a five-year period of that amount." The proposed deal, which was filed in court on Friday, involved several current and former officers and directors of Broadcom, including former general counsel David Dull. Shareholders had contended that the individual defendants manipulated Broadcom's stock options from 1997 to 2007 to enrich themselves and that Broadcom issued false and misleading statements to the U.S. Securities and Exchange Commission. Broadcom was forced to restate its earnings downward by $2.2 billion. Under the proposed terms, the defendants denied wrongdoing. […] The $118 million will be covered by the individual defendants' directors and officers liability insurance coverage, according to court documents. Broadcom will pay another $11.5 million in plaintiffs' attorney fees and expenses. The deal, if approved, would stay shareholder claims in a related class action against Broadcom pending the criminal trials of former chief financial officer William Ruehle and co-founder and former chief executive Henry Nicholas.

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