Nicholas, chairman and chief technology officer Henry Samueli, former chief financial officer William J. Ruehle, and general counsel David Dull perpetrated a scheme from to to fraudulently backdate stock option grants, failing to record billions of dollars of compensation expenses and falsifying documents to further the fraud. The SEC alleges that, through this scheme, the four officers made it appear that the options were granted at times corresponding to low points of the closing price of Broadcom's stock - despite the fact that the purported grant date bore no relation to when the grant was actually approved. This resulted in artificially and fraudulently low exercise prices for those options.
Chipmaker Broadcom stock options backdating case ends - Reuters
Broadcom to Take $2.22 Billion Charge Due to Backdated Options
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SEC Charges Former Broadcom Executives with Backdating
District Judge Cormac Carney dismissed the charges two days before the jury was to begin deliberations for former CFO William Ruehle, who had pleaded not guilty to 14 counts of fraud and conspiracy related to stock-option backdating. Carney also dismissed similar charges against Broadcom co-founder and former CEO Henry Nicholas III and challenged the government to defend its separate narcotics indictment against Nicholas, who is set to go on trial next year. Those unrelated charges include allegations that Nicholas slipped ecstasy into the drinks of business associates, maintained a drug warehouse and concealed illegal conduct with bribes and death threats. He has pleaded not guilty.
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