Irvine chipmaker Broadcom Corp. has agreed to pay $12 million to settle civil charges that it illegally backdated stock options for five years up to 2003, according to the Securities and Exchange Commission.
The SEC filed a civil complaint against Broadcom alleging the company boosted profits and minimized losses with reduced compensation costs from backdated options.
“The backdating scheme at Broadcom was orchestrated and carried out by Broadcom’s most senior executives,” the SEC said in its complaint.
The complaint singled out by position former chief executive Henry Nicholas; current chairman and chief technical officer, Henry Samueli; current general counsel David Dull; former chief financial officer Bill Ruehle; and former human resources director Nancy Tullos.
Broadcom didn’t admit or deny wrongdoing in the settlement.
“This is a major step in the process of closing this chapter as we remain focused on the company’s business today and for the future,” the company said in a statement.
Nicholas, who left Broadcom in 2003, “helped build one of America’s greatest technology companies, creating vast wealth for shareholders,” his lawyer Brad Brian, partner at Munger, Tolles & Olson, said in a statement.
“He did that in part by using stock options to recruit the world’s top engineering and management talent. At all times he believed he was complying with company rules, as well as accounting and legal requirements,” Brian said.
Broadcom restated results in early 2007 taking a $2.2 billion charge to past earnings to correct misdated stock option grants.
The restatement was the largest of any company involved in stock options backdating.
A separate criminal probe of current and former executives continues with indictments widely expected.
Earlier this year, former human resources executive Tullos agreed to a plea bargain with prosecutors and is set to be sentenced on May 5. She’s likely to avoid prison for working with prosecutors.
In March, she agreed to pay more than $1.3 million to the SEC as part of its civil probe into options at Broadcom.
