Brocade Stock Options Backdating Bill: $160M, Biggest So Far
Brocade Communications Systems Inc. has agreed to pay $160 million to settle a class action over stock options backdating in the biggest such settlement so far in a series of similar cases against other corporations. It must still be approved by the court before it is final.
The settlement follows a ruling by a federal judge in San Francisco last month that the company is liable for the conduct of a former chief executive, Gregory Reyes, who is now serving a 21-month prison term for manipulating stock option grants, reports the Wall Street Journal (sub. req.).
That set the stage for the settlement, according to lead plaintiffs lawyer Brad Beckworth of Nix, Patterson & Roach. At that point, “the only issue we were going to have to try was how much money Brocade was going to have to pay,” he tells the newspaper. “The company knew it was time to resolve this case.”
Brocade said in a written statement that settling is “in the best interest of its shareholders and the company as it significantly reduces the uncertainty associated with this ongoing litigation.” The settlement won’t be covered by insurance, a spokesperson tells the newspaper.
