The Securities and Exchange Commission is dropping its pursuit of a lawsuit against the founders of Broadcom Corp. and others a week after a federal judge said he had “serious problems” with the litigation.
Federal Judge Cormac J. Carney first dismissed the SEC suit as well as criminal charges against Broadcom’s founders and former chief financial officer in December.
In a hearing last week, an SEC lawyer argued for allowing the suit to proceed.
“We think we still have a case,” lawyer Molly White said in court.
A skeptical Carney gave SEC lawyers a week to show why the lawsuit should move forward, saying he saw “serious problems of proof” with the suit.
The suit was one of the last remaining pieces of the federal government’s case against Broadcom’s founders and others over stock options backdating at the Irvine chipmaker.
The suit had sought a number of penalties for options backdating, including barring cofounders Henry Samueli, Henry Nicholas, former financial chief Bill Ruehle and ex-general counsel David Dull from serving as officers at a public company.
Samueli resumed an executive role with Broadcom in December after a plea deal he struck with prosecutors was thrown out and the SEC suit was dismissed.
He had stepped back to an adviser role in 2008.
Nicholas, Broadcom’s former chief executive, left in 2003. Ruehle left in 2006. Dull left in 2008.
Federal prosecutors are awaiting word from the Justice Department on whether they will pursue an appeal of dismissed criminal charges against Samueli and Nicholas.
Carney dismissed charges against the cofounders and Ruehle in December, citing prosecutor misconduct and a lack of evidence.
In early 2007, Broadcom, a maker of chips for computers and consumer electronics, took charges of $2.2 billion to past earnings to fix misdated options—the largest restatement bill of any of the some 150 companies involved in illegal stock options backdating.
