Read The Recorder‘s roundup of the stock-option backdating scandal. There won’t be a test later … but there might be a subpoena.
Broadcom, an Irvine semiconductor company, settled backdating charges with the SEC, paying a $12 million fine in April. Previously, Nancy Tullos, vice president of human resources, settled options-related charges with the SEC.
Tullos, Nicholas and Ruehle all took the heat for backdating problems at Broadcom following the internal investigation into the conduct of the company’s executives, which was headed by Kaye Scholer’s Jeffrey Gordon. Tullos and Nicholas had left Broadcom in 2003, and Ruehle accelerated his retirement in 2006 as a result of the investigation, according to the SEC.
Both Dull and Samueli were cleared and remain at the company, but Broadcom announced late Wednesday that Samueli and Dull would take immediate leaves of absence from their posts, continuing as “non-officer employees.” It was not stated who would replace Dull as general counsel, and late calls and e-mail to the company were not returned.
All four executives targeted in Wednesday’s SEC complaint are fighting the charges. Samueli’s lawyer, McDermott, Will & Emery’s Gordon Greenberg, took special issue with the SEC’s conclusions. In a prepared statement, Greenberg said the SEC press release failed to mention that Samueli had been “exonerated” by the internal investigation.
Dull’s lawyer, O’Melveny & Myers’ Seth Aronson, said Wednesday afternoon that Broadcom’s “corporate settlement with the SEC precludes the company and its officers from denying the SEC’s allegations.”
Richard Marmaro, a Skadden, Arps, Slate, Meagher and Flom lawyer representing Ruehle, said in a prepared statement that his client “denies the allegations in the SEC’s complaint that he retroactively determined the grant dates for Broadcom’s stock options or that he, or any of Broadcom’s other senior executives, engaged in a scheme to defraud investors or misstate the company’s financial statements.”
Munger, Tolles & Olson lawyers representing Nicholas didn’t return phone calls seeking comment.
Kaye Scholer’s Gordon did not return a phone call seeking comment.
TROUBLE IN HOUSE
Broadcom’s Dull is the seventh general counsel to be charged in connection with the backdating scandal. He joins a list that includes Apple’s Nancy Heinen and McAfee’s Kent Roberts, who are both fighting charges.
The SEC’s Manvelian said that Dull’s case stood out among other GCs because of how he benefited from the backdating personally.
“We’ve got somebody who was not only involved in the backdating,” she said. “This is somebody who actually benefited from the conduct.” Ruehle and Dull each got options that, due to backdating, were inflated in value by about $21.6 million and $24.4 million, respectively, according to the complaint. Of that, Dull exercised some of his backdated options and turned a $1.8 million profit, according to the complaint.
Dull’s lawyer Aronson said he will respond to the SEC’s complaint at the appropriate time.
A Broadcom spokesman didn’t return an e-mail seeking comment about Dull and Samueli and their continuing roles at the company. The press release about the two officers said the company would not comment on the SEC charges.
