E&Y To Face Suit Over $2B Broadcom Backdating Scheme

Law360, Los Angeles (August 9, 2011, 7:15 PM EDT) -- A California federal judge on Tuesday refused to toss a class action accusing Ernst & Young LLP of covering up the $2.2 billion Broadcom Corp. stock option backdating scandal, ruling that the auditor could be found liable for investors' losses.

U.S. District Judge Manuel L. Real said Broadcom investors had adequately pled a loss causation theory against E&Y by connecting Broadcom's misleading financial data with an allegedly fraudulent auditor's opinion issued by the defendant in 2005.

When the extent of Broadcom's backdating practices were revealed to...
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