The Five Dumbest Things on Wall Street This Week

3. Broadcom Broadside

Accounting problems have Broadcom (BRCM Quote) seeing double.

The Irvine, Calif., wireless-chip company has been caught in the cross hairs of the government's big stock-option backdating investigation. Broadcom admitted in July that it had understated compensation costs by at least $750 million over four years. But now the company is saying the problem is much, much bigger.

Broadcom's ongoing accounting review has identified "additional issues concerning equity award accounting measurement dates or the affected time periods," the company conceded last Friday. As a result, a restatement of previous costs "will be at least twice the amount previously estimated and could be substantially more," Broadcom says.

A $1.5 billion restatement is surely nothing to sneeze at. The SEC and the U.S. attorney are looking into possible securities law violations at some 100 companies. Former execs at two tech rivals -- Brocade (BRCD Quote) and Comverse (CMVT Quote) -- have been charged with securities fraud.

Yet Broadcom continues to downplay the matter. When it first started checking its books back in June, Broadcom noted "various reports raising speculation about a few corporate stock-option grants." The company assured investors that it was "working proactively and with the highest degree of integrity" to get to the bottom of the accounting-misstep mystery.

Even now, with its restatement toll reaching mammoth proportions, Broadcom is quick with the excuses. "The magnitude of the total additional noncash stock-based compensation expense," Broadcom claims, "reflects the high volatility experienced by technology stocks, including Broadcom's, during the affected period."

Not to mention some awfully poor bookkeeping.

Dumb-o-Meter score: 88. The probe is ongoing, Broadcom assures us, though "we cannot yet estimate when the effort will be completed."

To watch Colin Barr's video take of this column, click here.