As part of the case settlement, Brocade Communications has agreed to pay $160 million t settle a federal securities class-action lawsuit related to stock-options backdating.
The class-action lawsuit was filed in the U.S. District Court for the Northern District of California in May 2005. Just recently, the two parties have reached settlement wherein Brocade will pay the above-mentioned amount to the plaintiff class in exchange for dismissal of all claims.
Brocade is among the dozens of companies hit by this stock-options backdating scandal. In August, Gregory Reyes, former Brocade Chief Executive Officer, was found guilty on criminal charges related to options-backdating. He was accused of defrauding shareholders between 2000 and 2004 by regularly modifying the grant dates of stock options awarded to recruit and retain employees. He was also charged of falsifying the documents to cover up his actions.
In January, Gregory Reyes was sentenced to 21 months in prison while another employee, the Brocade human resources director Stephanie Jensen was sentenced to four months in prison, from charges related to backdating.
Brad Beckworth, the lead plaintiffs’ attorney in the case at Nix, Patterson & Roach, said, “the only issue we were going to have to try was how much money Brocade was going to have to pay. The company knew it was time to resolve this case.”