Former Broadcom Vice President Pleads Guilty Over Stock Backdating Probe

LAWFUEL – The Legal Newswire – A former vice president of human resources at Broadcom Corporation has agreed to plead guilty to obstruction of justice in connection with a government investigation of options backdating at the Irvine-based technology company.

Nancy Tullos, 56, of Malibu, was charged today in a one-count criminal information filed in United States District Court in Santa Ana. The information alleges that Tullos instructed a subordinate to delete an electronic mail that was evidence of option backdating by Broadcom senior executives and board members. In a plea agreement also filed today, Tullos agreed to plead guilty to the charge and to cooperate with federal authorities in an ongoing investigation.

According to the information, Tullos assisted other Broadcom executives in recruiting an engineer to work for Broadcom in 1999. The information alleges that on May 25, 1999, Tullos wrote an electronic mail to a Broadcom senior executive – “Executive B,” who was also a board member and a member of the company’s two-man option-granting committee – asking whether Broadcom was going to make a job offer to the engineer. Executive B responded the next day that Broadcom “should make an offer.” One day later, Tullos responded to Executive B, that she was going to set up a job interview between the candidate and “Executive A” – the second member of Broadcom’s two-man option-granting committee and a board member.

Tullos then went on vacation, returning on June 4, 1999. Tullos stated in her plea agreement that when she returned, Executive A told her that the engineer had been hired on May 25, 1999.

Several weeks later, Tullos received an electronic mail from a subordinate asking if the engineer’s true hire date was May 25, 1999, noting that this date was used “most likely to lock in a particular price” for the engineer’s stock options. Tullos responded in a one line electronic mail: “pls. delete this message.”

Tullos admits in her plea agreement that she instructed her subordinate to delete this electronic mail because she was concerned that the hire date was after May 25, 1999, and did not want the electronic mail to be turned over to the authorities.

According to the information, on July 15, 1999, the new engineer at Broadcom wrote an electronic mail to Tullos and members of Broadcom’s shareholder services department that he had “just received his ID and password and was able to get into my account. My hire date was 5/25 NOT 5/28. The option price is showing to be $95.75 instead of $88.375. I hope this is just a simple clerical error since that has been a major key deciding factor” in his accepting a job at Broadcom. The electronic mail went on to say that the engineer and Executive A “had a clear agreement” that the engineer’s stock options would be granted on May 25, 1999 with an exercise price of $88.375.

A member of Broadcom’s shareholder services department, based on information she received from a senior finance executive, responded to Tullos and this finance executive, stating that Broadcom grants “options only as of the Friday close for employees who began work that week. We do not single out individuals to be granted options on their hire dates. His 5/28 grant date is not to be changed.”

The information then alleges that Tullos responded to the senior finance executive, asking whether he really wanted to send this message to the engineer.

According to the information, Tullos later learned that Broadcom’s option committee granted the engineer 120,000 employee options on May 25, 1999.

Tullos has agreed to appear in court for an arraignment on December 3.

The obstruction of justice charge carries a statutory maximum penalty of 10 years in federal prison.

The case against Tullos is the result of an ongoing investigation by the Federal Bureau of Investigation. The United States Attorney’s Office and the FBI received assistance from the Securities and Exchange Commission.

CONTACT: Assistant United States Attorney Andrew Stolper

(714) 338-3536

Assistant United States Attorney Robb Adkins

(714) 338-3593

Assistant United States Attorney Ken Julian

(714) 338-3537

Release No. 07-151

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