Brocade to pay $160 million in backdating case - MarketWatch
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By John Letzing, MarketWatch
Last update: 6:58 p.m. EDT June 2, 2008
SAN FRANCISCO
(MarketWatch) -- Brocade Communications Systems Inc. said Monday that
it has settled a federal securities class-action lawsuit related to the
improper dating of stock options.
Brocade (BRCD:
brocade communications sys i com new
Last: 7.93-0.13-1.61%
4:00pm 06/02/2008
Delayed quote data
ABRCD 7.93,
-0.13,
-1.6%)
said it will pay $160 million to the plaintiff class in the suit in
exchange for dismissal of all claims. The data storage company said the
payment will be reflected as an expense in its quarterly report for the
period ended April 26, which it expects to file with federal regulators
by
4:00pm 06/02/2008
Delayed quote data
ABRCD 7.93,
-0.13,
-1.6%)
said it will pay $160 million to the plaintiff class in the suit in
exchange for dismissal of all claims. The data storage company said the
payment will be reflected as an expense in its quarterly report for the
period ended April 26, which it expects to file with federal regulators
by
Brocade is one of a number of technology companies that have faced investigations of their dating of options.
Stock options give employees the right to buy company stock at a set
price , by backdating options and setting an artificially low price,
companies have been able to make them far more lucrative.
In August, former Brocade
Chief Executive Gregory Reyes was convicted of criminal fraud and
conspiracy charges related to his role in altering stock option grant
dates in order to artificially inflate their value. Reyes was sentenced
to 21 months in federal prison in January.
Chief Executive Gregory Reyes was convicted of criminal fraud and
conspiracy charges related to his role in altering stock option grant
dates in order to artificially inflate their value. Reyes was sentenced
to 21 months in federal prison in January.
"This settlement is in
the best interest of its shareholders and the company as it
significantly reduces the uncertainty associated with this ongoing
litigation," Brocade said in a statement.
the best interest of its shareholders and the company as it
significantly reduces the uncertainty associated with this ongoing
litigation," Brocade said in a statement.
Shares of Brocade fell slightly in after-hours trading following the settlement announcement, to $7.90.
John Letzing is a MarketWatch reporter based in San Francisco.
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