The National Law Journal reports that under the proposed terms, the defendants denied wrongdoing. The $118 million will be covered by the individual defendants’ directors and officers liability insurance coverage, according to court documents, and Broadcom will pay another $11.5 million in plaintiffs’ attorney fees and expenses, the news report said.
The proposed deal involves several current and former officers and directors of Broadcom, including former general counsel David Dull. If approved, the settlement would stay shareholder claims in a related class action against Broadcom pending the criminal trials of former chief financial officer William Ruehle and co-founder and former chief executive Henry Nicholas (see Broadcom Backdating Probe Reveals Attorney Misconduct ).
Shareholders had contended that the individual defendants manipulated Broadcom’s stock options from 1997 to 2007 to enrich themselves and that Broadcom issued false and misleading statements to the U.S. Securities and Exchange Commission. Broadcom was forced to restate its earnings downward by $2.2 billion. The company previously settled SEC charges, agreeing to pay a $12-million penalty (see Broadcom to Pay $12M to Settle Options Backdating Charges ).
The largest settlement in a derivative action involving stock options backdating involved UnitedHealth Group Inc. and its former chief executive William McGuire which agreed to pay $925 million to settle allegations by pension funds (see Judge Approves $925M UnitedHealth Backdating Suit Settlement ).
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