Ex-Broadcom HR VP Settles SEC Backdating Charges

Commission says she personally received in-the-money benefits of $1.2 million as she advanced the scheme at the company.

Broadcom Corp.’s former vice president of human resources, Nancy M. Tullos, settled Securities and Exchange Commission charges that she participated in a five-year scheme to backdate stock options granted to Broadcom employees and officers.

“Ms. Tullos personally benefited from the stock option backdating scheme that she facilitated in her role as head of Broadcom’s human resources department,” Rosalind R. Tyson, the SEC’s acting regional director in Los Angeles, said, adding that the SEC “will continue to aggressively pursue actions against individuals such as Ms. Tullos who engage in fraudulent options practices that mislead investors.”

In settling, Tullos agreed to pay more than $1.3 million in disgorgement and prejudgment interest, offsetting the value to her of exercisable stock options that Broadcom later cancelled. Without admitting to or denying the allegations in the complaint, she also agreed to pay a civil penalty of $100,000, and she will be enjoined from violations of an antifraud provision and other federal securities laws related to reporting and record-keeping.

The SEC charged Tullos with participating in a scheme at the chipmaking giant from 1998 to 2003 to backdate stock option grants, coinciding with the dates of low closing prices for the company’s stock, resulting in grants of in-the-money options to Tullos and numerous individuals. She personally benefited by receiving and exercising backdated stock options that were in-the-money by more than $1.2 million, the commission said.

The complaint alleged that she communicated false grant dates within the company and provided spreadsheets of stock option allocations for the backdated grants to Broadcom’s finance and shareholder services departments, knowing that they would be used in preparing Broadcom’s books, records, and SEC filings.

The SEC said its investigation in Broadcom backdating is continuing.

In the federal prosecution of cases agaist Broadcom, Tullos last November agreed to plead guilty to obstruction of justice. She had been accused of instructing a subordinate to delete an E-mail that was evidence of option backdating by Broadcom senior executives and board members. In her plea deal, she agreed to cooperate with federal authorities in the investigation.

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