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Securities Law

Judge Axes Guilty Plea, Says Broadcom Exec Didn’t Lie to SEC, Dismisses Case

Posted Dec 10, 2009 1:15 PM CDT
By Martha Neil

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Nearly 18 months ago, Broadcom Corp. co-founder Henry Samueli pleaded guilty to a felony charge of lying to securities regulators about his role in an alleged company stock options backdating scheme.

But in fact Samueli didn't make any material misstatement to the U.S. Securities and Exchange Commission, a federal judge concluded after listening to the testimony he gave, under a grant of immunity, in the securities-fraud trial of William Ruehle, the company's former chief financial officer. So yesterday, at a hearing in Santa Ana, Calif., U.S. District Judge Cormac Carney threw out the case against Samueli, reports Bloomberg.

"You have restored my faith in the criminal justice system," responded an emotional Samueli, reports the Orange County Register. "Thank you, your Honor."

Thom Mrozek, a spokesman for acting U.S. Attorney George Cardona in Los Angeles, declined to comment, Bloomberg says.

Outside the courtroom yesterday, attorney Gordon Greenberg, who represents Samueli, told the Orange County newspaper that he didn't expect the SEC to file any new charges against his client.

Samueli expressed his gratitude to the judge and said that the case against him had shaken his belief in the criminal justice system.

Although Samueli admitted on the stand yesterday that he was minimally involved in granting stock options to Broadcom employees and had lied to the SEC, Carney told him that the answer to a SEC question that led to the case against him—while "ambiguous, evasive and arguably nonresponsive"—was not a material false statement.

Granting company stock options to workers after the options become effective isn't illegal, but a decision to do so has to be reported to shareholders, the Register notes.

His 2008 plea agreement had called for Samueli to be sentenced to five years of probation and over $12 million in financial penalties, the Los Angeles Times reported in June 2008.

However, Carney had postponed sentencing Ruehle until after Samueli testified, Bloomberg notes.

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