U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21409 / February 4, 2010
Securities and Exchange Commission v. Henry T. Nicholas III, Henry Samueli, William J. Ruehle, and David Dull,, Civil Action No. SACV 08-539 CJC (RNBx) (C.D. CA)
SEC Will Not Proceed Further Against Broadcom Officers For Backdating Stock Options Based on Rulings and Comments From the Court
On May 14, 2008, the Securities and Exchange Commission filed a civil action in the United States District Court for the Central District of California alleging that Henry T. Nicholas III, Henry Samueli, William J. Ruehle, and David Dull, current or former officers of Irvine, Calif.-based Broadcom Corporation, engaged in a scheme to backdate stock options at the company from 1998 to 2003. The Commission's action was stayed at the request of the United States Attorney's Office pending the criminal trial of Nicholas and Ruehle on related charges.
On December 15, 2009, after the close of the evidence in Ruehle's criminal trial, the Court entered a judgment of acquittal in Ruehle's favor and dismissed with prejudice the stock option backdating indictment against Nicholas. In issuing these decisions, the Court questioned the conduct of the U.S. Attorney's Office and the sufficiency of the evidence. Separately, the Court dismissed the Commission's complaint without prejudice, and discouraged the Commission from proceeding further with its action.
On January 28, 2010, at a hearing on the Commission's motion to clarify the order dismissing its complaint, the Court expressed its view that the evidence adduced during Ruehle's criminal trial and the courts ruling precluding the testimony of Broadcom's former vice president of human resources would result in insufficient evidence for the Commission to withstand summary judgment motions from the defendants.
Given the Court's sua sponte dismissal of the Commission's complaint on December 15, 2009, and the Court's explanatory comments during the January 28, 2010 hearing, the Commission does not intend to proceed further in this action.