Broadcom agreed to pay $12 million to settle charges with the Securities and Exchange Commission over the chip maker's stock-option backdating that led to a restatement of more than $2 billion.

The SEC said that Broadcom had misrepresented the dates on which stock options were granted to executives and employees between June 1998 and May 2003. Broadcom's chairman and CEO sat on the two-member option committee, which had the authority to approve options for all employees except the most senior executives.

The SEC said the option committee approved as many as 88 grants during the relevant period, but for many of the grants there was no meeting or decision made by the committee on the dates the grants were supposedly approved. Instead, Broadcom's former CFO allegedly selected many of the grant dates retroactively based on a comparison of Broadcom's historical stock prices, and the two option committee members allegedly concealed the backdating by signing false committee written consents stating that the grant had been approved "as of" the retroactive date.

In addition, the SEC's complaint alleges that the top officers - not the compensation committee - decided on option grants to Broadcom's executives and used hindsight to select the dates for them. According to the complaint, Broadcom's general counsel directed the preparation of false board and compensation committee written consents to conceal some of these grants.

The SEC further alleges that, as a result of the backdating scheme, Broadcom avoided reporting $2.22 billion in compensation expenses during the relevant period. Broadcom overstated its income by between 15 percent and 422 percent, and understated its loss by between 16 percent and 38 percent.

Without admitting or denying the SEC's allegations, Broadcom agreed to settle the charges by consenting to a permanent injunction against further violations of the antifraud, record-keeping, financial reporting, internal controls and proxy provisions of the federal securities laws, and payment of the $12 million penalty.

"We are pleased that the SEC's investigation of our historical stock option grant and accounting practices has concluded as to the company," said Broadcom spokesman Bill Blanning. "This is a major step in the process of closing this chapter as we remain focused on the company's business today and for the future. In agreeing to settle and resolve this matter, the company did not admit or deny the SEC's allegations, and the company also agreed that it would not make or permit public comment on the allegations made in the SEC's complaint."

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