X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
News that Marvell Semiconductor Inc. fired its general counsel, Matthew Gloss, came Monday as part of a press release packed with several demotions and departures because of stock-option backdating at the company. But it remains unclear whether Gloss was terminated directly because of his involvement in backdating – or because of something else. The Santa Clara, Calif.-based semiconductor company noted that Gloss and others “bear varying degrees of responsibility” for “the systemic failure of internal controls” over stock option grants at the company. An attorney for Gloss said his client’s firing was not related to backdating, but declined to say more. Marvell spokesman Peter Hillan would not comment on the firing other than to repeat that the company was “unable to discuss reasons surrounding the termination.” Hillan acknowledged that Gloss was fired before the company’s special committee investigating backdating had released its report, the findings of which were detailed in Monday’s press release. Gloss is certainly not the first general counsel to get the boot following a backdating investigation. General counsel at CNET, Comverse Technology and McAfee Inc. have all been cut loose in the wake of probes. Marvell remains under investigation by the Department of Justice and the Securities and Exchange Commission. The company said it found numerous instances of backdated option grants given to executives, including grants from 2003 forward. Gloss had worked at Marvell since 2000, becoming general counsel in 2001. Miles Ehrlich, Gloss’ attorney on stock option-related issues, said his client had “nothing to do with any findings by the special committee regarding option timing problems at Marvell.” He added: “Mr. Gloss had no role in the selection or approval of grant dates and no knowledge of any effort by others to backdate stock options.” Ehrlich wouldn’t say why Gloss was fired. Gloss has also hired an employment lawyer, Cliff Palefsky, who said it was inappropriate to comment at this time. Marvell also announced Monday the resignation of its finance chief, George Hervey, and said that co-founder Weili Dai would be giving up her positions as executive vice president, chief operating officer and director. Dai will assume a “significantly reduced role” as director of strategic marketing and business development, a nonmanagement position, the company said. Her husband, Sehat Sutardja, will be giving up his role as chairman of the board, but will remain chief executive and a director. In the past, Dai and Sutardja have served as the sole members of the company’s stock option committee. A consolidated shareholder derivative complaint alleges they served in that capacity when numerous options were backdated. Marvell’s stock option committee made grants to employees as well as executives, according to a public filing from 2003. Jesse Fried, a University of California, Berkeley’s Boalt Hall School of Law professor, said he found the two-person stock option committee “weird.” “That’s not good corporate governance practice,” he said. Marvell said it will restate its earnings for several years and take a charge of from $325 million to $350 million. Monday’s announcement was “further confirmation that . . . the company has suffered massive harm as a result of the board of directors,” said Darren Robbins, a partner with Lerach Coughlin Stoia Geller Rudman & Robbins, whose firm represents plaintiffs in the consolidated derivative lawsuit. Gloss has not been named as a defendant in the suit, which names mainly board members, but Robbins said “of course as the general counsel, he participated in the options-granting process.” Robbins would not comment on what he knew about Gloss’ firing other than to say it was because of “participation in and or oversight of areas which have come under substantial scrutiny by regulators and litigants over the last year or so.” Robbins also said he expected the Department of Justice or the SEC to file charges against more than one officer at Marvell by June, but he declined to say more. Gloss came under public scrutiny after he inadvertently left a message in 2001 on the voicemail of an executive at a rival company, the now-bankrupt Jasmine Networks Inc. Gloss allegedly talked about a plan to hire away engineers from that company in the message, spurring contentious trade secrets litigation. This article originally appeared in The Recorder, a publication of ALM.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.