Former Broadcom Chief Financial Officer Bill Ruehle and co-founder Henry Samueli were named as defendants, as well as former general counsel David Dull and several other former and current executives and directors.Broadcom said in its statement that it "steadfastly maintained" the claims weren't true, but added that settling the civil case will allow the chipmaker to move forward. Carney also dismissed an SEC civil action against Nicholas, Samueli, Ruehle and another former executive.Backdating involves retroactively setting a stock option's exercise price to a low point in the stock's value, boosting profits when the shares are sold.
Judge Carney also dismissed the options backdating-related SEC enforcement action as well, though the SEC action dismissal was without prejudice.
Judge Carney did also "discourage" the SEC from refilng its complaint.
Dubbs, attorney for the lead plaintiff, the New Mexico State Investment Council. paid $895 million in 2008 to settle investor claims related to backdating.
The current Broadcom lawsuit was filed by investors who bought or acquired shares of the company's common stock between July 21, 2005 and July 13, 2006 and includes several million shareholders.
In light of the circumstances surrounding Judge Carney’s dismissal of the criminal indictments, the size of the class action settlements is interesting.
It certainly seems that given the concerns that Judge Carney noted in dismissing the indictments that the class action plaintiffs might face some formidable obstacles on key aspects of their case, including in particular in establishing that the defendants acted with scienter.
Broadcom Corporation, which previously settled its options backdating related derivative suit for 8 million, announced on December 29, 2009 (here) that it had settled the separate options backdating related securities class action lawsuit pending against the company and certain of its directors and officers in exchange for its agreement to pay 0.5 million. Because the company provided its D&O insurers with complete releases in connection with the prior derivative settlement, Broadcom apparently is funding the class action settlement entirely out of its own resources.
Broadcom’s press release states that it will be recording the settlement amount as a one time charge in its fourth quarter 2009 financial statements.
Nicholas III, and the former chief financial officer, William Ruehle, among others of determining option grant dates retroactively from 1998 to 2003.