Administration May 12, 2008

Marvell Technology and Former CEO Agree to Backdating Settlement

May 12, 2008 (PLANSPONSOR.com) - The Securities and Exchange Commission (SEC) on Thursday hit Santa Clara-based Marvell Technology Group and its co-founder and former CEO with civil securities charges for backdating stock options from 2001 to 2004.
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The San Jose Mercury News reports that the company and Weili Dai, co-founder and former chief operating officer, agreed to settle the case with the SEC without admitting wrongdoing. Under the agreement, Marvell is to pay $10 million and Dai $500,000, according to the news report.

The lawsuit accuses the company of backdating stock options to Marvell employees from at least early 2001 through 2004, saying Dai primarily acted as Marvell’s “Stock Option Committee” to pick dates for options that would be more favorable to company insiders, the Mercury News said. The SEC alleges that the backdating forced the company to overstate its income by $362 million between 2000 and 2006.

Since its beginning in 2006, the widespread probe into options backdating has resulted in a number of settlements (See Broadcom to Pay $12M to Settle Options Backdating Charges ), some executive convictions (See Ex-Brocade Exec Slapped with Jail Time for Backdating Charges ), and shareholder lawsuits (See United Health Options Backdating Suit Gets Class Action Status ).

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