Broadcom settles class action lawsuit

The loose ends of a backdating stock-option occurrence that entangled local billionaire Henry Samueli and Broadcom Chief Financial Officer William Ruehle are slowing being tied up through the company’s announcement on Tuesday of the settlement of a class-action lawsuit.

Broadcom officials announced that they have agreed in principle to settling a lawsuit by stockholders against the company and some of its executives for $160.5 million. The class was made up of people and organizations who bought stock in Irvine-based Broadcom between July 21, 2005 and July 13, 2006.

The company will reveal at a later date how the award money will be dispersed.

The Securities and Exchange Commission found that company executives backdated stock-options for its employees but did not inform stockholders. Backdating options for employees gives the stock greater value because they price it low so it can sell high. While legal, it becomes illegal when stockholders are not told because it can mislead them about the company’s earnings.

Broadcom’s Chief Executive Officer, Samueli, and Ruehle, both of Newport Beach, were among those charged with federal crimes related to the backdating of stock options. Earlier this month, a federal judge threw out the charges against both of them, citing misconduct by federal prosecutors and witness intimidation.

As part of the settlement with stockholders, Broadcom does not have to admit any liability or wrongdoing. Court records show that a settlement could be on the horizon for a similar suit involving company derivatives.