Opinion ID: 214714
Heading Depth: 1
Heading Rank: 2

Heading: PROCEDURAL HISTORY and BACKGROUND.Procedural History

Text: This case finds its roots in a large accounting fraud related to stock option backdating. Broadcom, a semiconductor company with revenues in excess of $2.5 billion in 2006, fraudulently overstated its net earnings, and understated its compensation expense, by more than $2.2 billion between 2000 and 2006 due to improper accounting of backdated stock options. In October 2008, Plaintiffs filed a Consolidated Amended Class Action Complaint on behalf of all persons who purchased Broadcom Class A common stock between July 21, 2005 and July 13, 2006. The Complaint seeks damages under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Securities Exchange Commission Rule 10b-5 for Defendants' fraudulent accounting practices, alleging they caused Broadcom's stock price to be artificially inflated. Defendants moved to dismiss. The district court heard oral argument in February 2009 and granted Defendant EY's Motion to Dismiss, stating: I think the allegations are deficient on actual knowledge of the defendant . . ., and I think there's a little bit of a heavier burden of allegations on accountants on the question of scienter. Plaintiff has failed adequately to plead scienter as against EY[.]