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Appeals Court: Former Broadcom CFO Comments Can Go to Trial

Former Broadcom Corp. financial chief Bill Ruehle saw an early legal win reversed Wednesday when a federal appeals court said his statements to during a probe of stock options backdating at the chipmaker could be used by prosecutors in their case against him.

The 9th U.S. Circuit Court of Appeals ruled that lawyers from the U.S. Attorney’s Office in Santa Ana could bring to trial comments Ruehle made about options.

Ruehle is set to go trial Oct. 20 in federal court in Santa Ana.

The ruling reverses a February win for Ruehle in which U.S. District Judge Cormac Carney decided that talk about options between Ruehle and lawyers from Irell & Manella LLP couldn’t be used by federal prosecutors.

Carney determined Irell didn’t get written consent to disclose what the judge considered to be confidential talks between Ruehle and Broadcom-hired lawyers at Irell.

The appeals court disagreed, saying Ruehle only began claiming an attorney-client privilege “when he learned that the government intended to use this information against him in connection with possible criminal charges,” according to a Reuters report.

The appeals court also said Ruehle knew the information collected by Irell would be shared with

others, including Broadcom’s auditor at the time, Ernst & Young.

Ruehle and Broadcom cofounder and former chief executive Henry “Nick” Nicholas are charged with of conspiring to conceal and understate the chipmaker’s compensation expenses between 1999 and 2005 by backdating options.

Nicholas, who also faces drug charges, is set to go to trial next year.

Ruehle left Broadcom in 2006 after serving as financial chief for most of the company’s existence. Nicholas left in 2003.

In early 2007, Broadcom restated several years of financial results to reflect $2.2 billion in charges for misdated stock options. The restatement bill was the largest of any company involved in a stock options issue.

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