Judge Cormac Carney dismissed all the charges against two defendants in the Broadcom backdating case due to “shameful prosecutorial misconduct and a lack of evidence”. Chief Financial Officer William Ruehle, as well as CEO Henry Nicholas III, were acquitted of charges.
Evidence in the securities case provided that prosecutors tried to influence the testimony of three witnesses, improperly contacted witnesses attorneys and leaked information about grand jury proceedings to the media.
Judge Carney stated that the government improperly influenced three witnesses who were critical to Ruehle’s defense and that the effect of the misconduct distorted the truth finding process”. The same witnesses were been necessary to prove Nicholas’s defense. If Carney were to submit the case to the jury, it would make a mockery of the constitutional right to due process and fair trial.
Broadcom started in 1991 and took public only 7 years later. It grew to 7,000 employees worldwide and is the lead manufacturer for the chips used in everything from cell phones to cable boxes. Last year it had nearly $5 billion in revenue.
In 2006, federal authorities began investigating stock options granted by hundreds of companies, including Broadcom. While many companies have settled with the SEC, criminal cases are much less common and have had trouble sticking. For example, former CEO of Brocade was ordered a new trial due to prosecutorial misconduct. McAfee’s former general counsel was acquitted on similar charges earlier this year. KB Homes former CEO is set to go on trial in February on charges regarding stock options.
Henry Samueli, co founder and CEO of Broadcom, was exonerated after being charged with a single count of lying to the SEC. Judge Carney stated (in regards to Samueli), ”The government embarked on a campaign of humiliation and other misconduct to embarrass him and bring him down.” Samueli, a billionaire philanthropist and also owner of the NHL’s Anaheim Ducks, said Carney’s ruling had restored his faith in the judicial system.
Legal experts following the case said the judge’s actions were astonishing and showed he was deeply disturbed by the government’s alleged misconduct.