Dec. 19, 2006

Broadcom reveals that the U.S. Securities and Exchange Commission has now escalated its inquiry to a formal investigation.

The chipmaker also announces that its own internal review of its stock option practices revealed improper dating.

Broadcom says it has completed the internal review of its stock option practices. According to a company statement, it found that "between June 1998 and May 2003, its informal option grant procedures and processes lacked adequate controls".

Broadcom also said that "the company's documentation and record keeping were insufficient to verify many of the original measurement dates," according to the prepared statement.

The company first announced plans in mid-July to restate financial results for full-years 2000 to 2005 plus the first quarter of 2006. The voluntary action was prompted by an internal investigation that uncovered some inconsistencies but pointed to no wrongdoing, according to the company.

When the company first announced its restatement plans, it estimated it would uncover errors totalling about $750 million. In September, however, the company upped that number to $1.5 billion.

Now that it has completed its review, Broadcom says it is working to file amended annual reports for 2005. An amended first quarter of 2006 report also is on tap.

With regards to the formal SEC investigation, Broadcom said it is continuing to work with regulators.

On a more positive note for Broadcom, the U.S. International Trade Commission ruled last week that Qualcomm did in fact infringe on one of Broadcom's patents.

The consequences from the ruling are not due out until February.

Source: Wireless Week