The Securities and Exchange Commission said Thursday it will not pursue a civil action against four former Broadcom Corp. executives for allegations of securities fraud.
The SEC had filed a lawsuit against Broadcom co-founders Henry T. Nicholas III and Henry Samueli, as well as former Chief Financial Officer William Ruehle and former general counsel David Dull.
The announcement wipes away the last vestiges of a massive and high-profile criminal and civil prosecution of Broadcom's top leadership on allegations of stock option backdating that fell apart under judicial scrutiny.
U.S. District Judge Cormac J. Carney abruptly tossed criminal charges late last year against Nicholas and Ruehle just days before a jury was to deliberate in Ruehle's trial because of findings of prosecutorial misconduct.
At the time, Carney also dismissed the SEC's civil lawsuit against the four but left open the possibility that the agency could refile. At a hearing last week, Carney told SEC attorney Molly White to refile the civil action by Thursday but indicated he did not think the case would hold together after the criminal case fell apart.
White said in court papers filed Thursday that the agency would not refile.
Federal prosecutors have said they will appeal the dismissal of the stock options backdating case against Nicholas.
Backdating involves retroactively setting a stock option's exercise price to a low point in the stock's value, boosting profits when the shares are sold. It is legal when properly accounted for, but if not properly disclosed it can allow companies to overstate profits and underpay taxes.
The Irvine, Calif.-based chipmaker was ultimately forced to write down $2.2 billion in profits after its actions were uncovered. Hundreds of other companies have been forced to make similar adjustments or pay fines to the SEC since authorities began investigating the practice in 2006.
In Broadcom's case, Carney said evidence in the criminal case showed prosecutors tried to influence the testimony of three key witnesses, improperly contacted witnesses' attorneys and leaked information about grand jury proceedings to the media.
The government's lead attorney, Andrew Stolper, declined to comment outside court, but in a court hearing, he acknowledged leaking information and called it the "stupidest thing I have done in my career."
(This version corrects Dull's title to general counsel, not corporate counsel.)
© Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.