Securities regulators on Wednesday charged Broadcom Corp. co-founders Henry T. Nicholas III and Henry Samueli with falsifying the company's reported income, leading to what is believed to be the largest accounting restatement to date because of backdating stock options. A civil complaint filed by the Securities and Exchange Commission also charges former chief financial officer William J. Ruehle and general counsel David Dull. It seeks injunctions, unspecified monetary penalties as well as removing Samueli and Dull from their positions. The four men are accused of violating federal securities laws by misrepresenting the dates on which stock options were granted to its executives and employees.

The SEC said that as a result of the scheme, Broadcom restated its financial results in January 2007 and reported more than $2 billion in additional compensation expenses.

"This egregious misconduct resulted in the largest accounting restatement to date arising from stock option backdating and warrants the significant sanctions sought from these individuals," said Linda Chatman Thomsen, director of the SEC's Division of Enforcement.

The SEC has reached civil settlements with eight companies, including Broadcom, and at least 30 former executives over improper options backdating since late 2006. At one point, the SEC was investigating more than 100 companies.

In addition, federal prosecutors have investigated scores of companies for options backdating, and at least 18 executives have been hit with criminal charges. Nine have pleaded guilty.

Samueli's attorney Gordon Greenberg said in a statement that a 2006 audit exonerated his client from any wrongdoing in the options backdating.

The SEC also "failed to acknowledge that Dr. Samueli has no accounting training and was never responsible for the processing or accounting of stock options," Greenberg said.

Ruehle's attorney, Richard Marmaro, also denied his client did anything illegal.

"Bill Ruehle denies the allegations in the SEC's complaint that he retroactively determined the grant dates for Broadcom's stock options or that he, or any of Broadcom's other senior executives, engaged in a scheme to defraud investors or misstate the company's financial statements," Marmaro said. "When the full truth comes out, we are confident that he will be fully vindicated."

Phone messages left for attorneys representing Nicholas and Dull were not immediately returned.

The SEC complaint filed in U.S. District Court claims the backdating scheme occurred between 1998 and 2003 in which the four men misrepresented the dates stock options were granted in the company.

The complaint also said Nicholas and Samueli served on a two-member option committee that approved up to 88 grants during that period, but didn't hold meetings on the dates the grants were supposedly approved.

Backdating stock options involves retroactively setting the exercise price to a low point in the stock's value to increase profits for an executive or employee when shares are sold.

If companies backdate options without properly disclosing and accounting for the move, it can cause profits to be overstated and taxes to be underpaid.

Samueli, 53, co-founded the semiconductor-maker with Nicholas in 1991. The two first met while working for defense contractor TRW Inc. Samueli is chairman and chief technical officer and owns nearly 7 percent of the company's stock, according to the SEC.

Nicholas, 48, served as CEO and president since Broadcom's inception until he resigned in 2003. Last month, his attorney Bill Hake said Nicholas had entered an alcohol rehabilitation program.

Ruehle, 65, joined the company in 1997 as vice president and chief financial officer and retired in 2006. Dull, 59, was named Broadcom's general counsel and vice president of business affairs in 1998.

The U.S. attorney's office also has launched an investigation into stock-option backdating at Broadcom. In a court hearing in January, federal prosecutors told a judge that Nicholas and Samueli were "unindicted potential co-conspirators" in the probe.

A former human resources executive, Nancy Tullos, pleaded guilty to obstruction of justice earlier this year and settled with the SEC for $1.4 million without admitting wrongdoing. She is cooperating in the ongoing U.S. attorney's investigation.

The Irvine-based company also agreed last month to pay $12 million to settle similar charges without admitting or denying the allegations.

Broadcom's shares slid 1.9 Percent, or 51 cents, to $26.96 in trading Wednesday.

Written By GREG RISLING

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