Henry Samueli, the billionaire California entrepreneur and philanthropist, on Monday pleaded guilty to making a false statement to federal authorities about his role in stock options backdating at Broadcom, the semiconductor company he co-founded in 1991.
Mr Samueli, who owns the Anaheim Ducks ice hockey team and is a leading patron of the University of California, had faced up to five years in prison after federal prosecutors accused him of making a false statement to the Securities and Exchange Commission about his involvement in granting stock options to Broadcom employees.
In a plea agreement announced on Monday, Mr Samueli agreed to forgo a trial, enter a guilty plea and pay $12.3m in fines.
In return, prosecutors agreed to recommend a sentence of five years’ probation. The agreement is subject to approval by a federal judge.
“Both parties have agreed this is a fair resolution of this issue and we believe it is inappropriate to comment further until the judge rules,” said Mr Samueli’s attorney, Gordon Greenberg.
Mr Samueli’s plea-bargain came days after his fellow co-founder and former Broadcom chief executive, Henry Nicholas, pleaded not guilty to securities fraud and drug charges stemming from the government’s backdating investigation.
Among other allegations, prosecutors accused Mr Nicholas of putting ecstasy in the drinks of industry executives and Broadcom customers without their knowledge.
Mr Nicholas’s attorney did not return a call seeking comment.
Broadcom’s shares rose 0.4 per cent on Monday to $26.99, capping a rise of more than 48 per cent since March. In April, Broadcom agreed to pay $12m to settle SEC backdating charges against the company. It neither admitted nor denied wrongdoing.
Broadcom was among the biggest of more than 200 companies to become caught up in stock options backdating – a potentially fraudulent practice in which companies inflated the value of stock options grants by changing their grant dates to coincide with low points in the value of a company’s shares. While backdating is not itself illegal, it creates accounting headaches and can cross the line into securities fraud if not properly disclosed to shareholders.
Last year, Broadcom was forced to restate its past earnings by $2.2bn to account for the impact of improper options grants. The restatement was the biggest to emerge from the backdating scandal.
Former executives at dozens of companies have been forced to resign over stock options backdating. Criminal charges have been brought in only a handful of cases. Gregory Reyes, the founder and former chief executive of Brocade Communications, a networking equipment maker, became the first former executive to face jail time over backdating charges after he was convicted of securities fraud last year. Mr Reyes remains free pending an appeal.