Shareholder Class Action Against Brocade Communications Systems Arising out of Options Backdating Settled for $160 Million
Mark Maremont and John Hechinger of the Wall Street Journal report today that Brocade Communications Systems has agreed to pay $160 million to settle a class action lawsuit filed by shareholders. The class action sought damages allegedly caused by the backdating of stock options. The settlement followed the San Francisco federal court’s ruling last month that Brocade was liable for the conduct of its former Chief Executive Officer, Gregory Reyes, who was sentenced last January to 21 months in federal prison for his role in the scandal. This ruling, coupled with the district court earlier order granting summary judgment in favor of the class action plaintiffs on Mr. Reyes’s fault in the matters placed at issue by the class action complaint, left Brocade with two choices: settle, or proceed to trial with the only issue being the amount of damages to be awarded.
The article, entitled “Brocade Settles Suit for $160 Million,” may be found on page B4 of the June 3, 2008 edition of The Wall Street Journal.