SEC targets Broadcom GC as stock option probe widens

Broadcom Corporation’s general counsel David Dull has come under the spotlight of the Securities Exchange Commission (SEC) for allegedly backdating the chipmaker’s stock options.

On Tuesday Dull was sent a Wells Notice, which gives companies and individuals an opportunity to respond if the SEC decides to pursue a lawsuit. The SEC had sent notices to Broadcom and its chairman and co-founder Henry Samueli.

The practice of backdating stock options can boost share price gains for insiders at the expense of shareholders.

Broadcom had re-adjusted its financial statements for the years 1998 to 2005 after a voluntary review of its stock options practices. The adjustments totalled $2.2bn (£1.1bn) – the largest such adjustment of the 100 companies under investigation by the SEC.

Broadcom has since pointed the finger at former chief executive Henry Nicholas and former chief financial officer William Ruehle for the improper accounting.

The news follows the resignation of rival company Qualcomm’s general counsel, who left his post a day before following a £20m loss in the courtroom to Broadcom over patent issues.