Sunday, September 14, 2008

Broadcom Co-Founder Plea Deal Rejected by Judge

We discussed a while ago the plea bargain entered into by Henry Samueli, co-founder of Broadcom. The deal would have allowed for probation for Samueli's alleged role in a stock-options backdating scandal. Last week, however, Judge Cormac J. Carney rejected the bargain, stating that the proposed punishment would not be sufficient.  He stated, "The court is not alone in concluding that a five-year probationary sentence does not capture the seriousness of Dr. Samueli's alleged misconduct."  The Wall Street Journal Law Blog had a nice discussion of what happens next. 

What are the options for prosecutors and Samueli in the wake of Carney’s ruling? They asked the judge for time to renegotiate their plea deal to address the court’s concerns, including the fact that Samueli didn’t agree to cooperate with prosecutors in cases against other former executives, such as former CFO, William J. Ruehle, or co-founder Henry T. Nicholas III, who were charged earlier this year with securities fraud. They pleaded not guilty.

Samueli could also withdraw from the agreement, in which case he could be criminally charged, or he could agree to stick with the current agreement and let the judge sentence him. The statutory maximum sentence for lying to the SEC is five years in prison.

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