Opinion ID: 214714
Heading Depth: 1
Heading Rank: 12

Heading: Holistic Review of Plaintiffs' Allegations

Text: In addition to reviewing the allegations of scienter individually, this Court has also viewed the claims holistically. When viewed in totality, there is no doubt the allegations, at this early phase of the proceedings, present at least as strong an inference of scienter as any competing innocent inference. As stated by the court in In re Oxford Health Plans Inc. Sec. Litig., 51 F.Supp.2d 290, 294 (S.D.N.Y.1999), the [P]laintiffs allege `in your face facts,' that cry out, `how could [defendants] not have known that the financial statements were false.' (citation omitted). EY, as Broadcom's auditor from 1998 until being fired in 2008, repeatedly offered unqualified audit opinions despite an awareness of large, undocumented stock option grants, and despite having suspicions of Broadcom's option grant procedures multiple times over the years, from the questionable $700 million May 2000 grant, to the three separate 2001 grants when one of the two compensation committee members was deceased, to assisting Broadcom in 2003 with corrective actions to prevent and detect any future instances of improper accounting for equity awards. During this entire time, EY failed to change course. While Broadcom's bad acts certainly may have played a role in the overall fraud, this Court's purpose at this stage, under Tellabs, is simply to test whether the Complaint provides a sufficient inference of scienter for the case to proceed against EY. It does.