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Broadcom Agrees to Settle Backdating Case
Daily Journal
August 31, 2009
Irvine-based Broadcom Corp. has reached a tentative $118 million settlement with its shareholders over a derivative action over stock option backdating, including $11.5 million in fees for the plaintiffs' attorneys. It marks the one of the largest settlements in a derivative action related to stock options backdating, and may be the largest ever.
Significantly, the plaintiff attorneys did not settle with the company's two billionaire co-founders Henry T. Nicholas and Henry Samueli, nor the former chief financial officer William J. Ruehle, who all were implicated in the company's stock option backdating. In 2007, the Irvine semiconductor posted a $2.2 billion restatement to its past expenses because of backdating, the largest of more than 100 companies with similar problems.
"That's a very large number for a derivative action - it's astounding," said John Coffee, a securities professor at Columbia Law School in New York. "Five years ago, it would not have settled for this much." Richard Heimann and Joy Kruse, of Lieff Cabraser Heimann & Bernstein in San Francisco, who represented the shareholders, declined to comment.