The Securities and Exchange Commission has asked Broadcom Corp. for documents relating to the chipmaker’s granting of options, making it the second Orange County company to be probed on the timing of options grants.
The Los Angeles office of the SEC told Broadcom officials late Friday that the company would be receiving “an informal request for information” regarding its stock-option practices, Broadcom said Monday.
Broadcom started a “voluntary” review of stock-option grants in May after analysts and media accounts started looking at the timing of the company’s options grants.
The company itself is reviewing all options granted since its public offering in 1998. The review is being conducted by Broadcom’s outside lawyers.
Regulators are looking at whether companies picked low points for their stocks as the dates for granting options.
Backdating instantly gives executives a paper profit on the options. It also nixes the motivating force behind options: encouraging holders to work toward boosting the stock price. Backdating also can violate tax and disclosure rules.
In early June, Irvine-based Quest Software Inc. said it received an inquiry from the Securities and Exchange Commission regarding past stock option grants.
Broadcom also said Monday it faces a shareholder lawsuit that alleges misconduct in the granting of options. Another lawsuit against the company was amended to include the options issue.
The chipmaker called both without merit.
