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Broadcom backdating

With jumbo derivative settlements now a more frequent occurence, Excess Side A insurers could begin to accumulate substantial claims losses.

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have agreed to settle the case for 8 million, to be funded entirely by the company’s D&O insurance carriers.The company’s payment of these indemnifiable amounts, in and of itself, would not have triggered the Excess Side A policies.However, the derivative lawsuit’s claim against the individual defendants for the harm to the corporation caused by the backdating includes claims on the corporation’s behalf for the enormous litigation expense the company incurred due to the alleged misconduct.Given the number of carriers involved, the complexity of the coverage issues and the sheer quantity of dollars involved, the completion of this settlement is an extraordinary accomplishment.I tip my hat to all of the lawyers involved in putting this together.Excess Side A insurance only provides protection to individual directors and officers (and not to the company itself) and only against loss that is nonindemnifiable, whether due to insolvency or legal prohibition.This element of insurance for nonindemnifiable loss is critical to understanding this settlement.The Insurance Agreement specifies the dollar amount each carrier is to contribute to the settlement.Among other things, the Insurance Agreement shows that the Excess Side A insurers will contribute a total of million, with each of the successive Excess Side A carriers contributing a correspondingly smaller amount.The settlement of the claims in the derivative lawsuit against the individual defendants to recoup the harm to the corporation was not indemnifiable, triggering a potential payment obligation for the Excess Side A carriers.So if, for example, there had been no derivative lawsuit, and the company had, say, tried to recoup its defense expense from the carriers directly in a declaratory judgment action, the Excess Side A carriers would have taken the position that because there was no nonindemnifiable loss, their policies were not implicated.


  1. SEC Charges Four Current and Former Broadcom Officers for Backdating Options. FOR IMMEDIATE RELEASE 2008-87. Washington, D. C. May 14, 2008 — The Securities and Exchange Commission today charged two current and two former top officers of Irvine, Calif.-based Broadcom Corporation for their alleged.

  2. Aug 23, 2008. While the story was enthralling, I didn't understand what any of it had to do with a federal investigation into stock option backdating. Sure, Broadcom had to take a $2.2 billion charge to fix the accounting mess left by the company's former executives. But how does that relate to hiring prostitutes and drugging.

  3. Apr 22, 2008. "The backdating scheme at Broadcom went on for five years, involved dozens of option grants, and resulted in the largest accounting restatement to date arising from stock option backdating," said Linda Chatman Thomsen, Director of the SEC's Division of Enforcement. "The scope and magnitude of the.

  4. Sep 21, 2012. Almost from its inception, the federal government's options backdating case against executives of Broadcom Corp. reeked of cheap melodrama more than it gleamed with truth-seeking about corporate.

  5. Nov 12, 2009. At the end of the day, it is difficult to identify a victim in Broadcom's backdating "scandal." Broadcom is not Enron or Worldcom, The failure to take an accounting charge for stock options--unlike efforts to hide debt from the balance sheet and book revenues that were never earned--did not mask the true.

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