Brocade Communications Systems, Inc., has agreed to pay $160 million to settle a lawsuit filed after the company restated financial results because of issues related to backdating of stock options.
Backdating stock options involves changing the actual grant date to one from the past with a lower stock price, making the stock options more valuable.
In 2005, Brocade restated financial results because of accounting issues with its stock-option practices. A group of plaintiffs would later file a lawsuit against Brocade and certain directors and officers.
Under the terms of the preliminary settlement, Brocade will pay $160 million to the plaintiff class in exchange for the dismissal of all claims against all defendants in the litigation. The settlement is subject to final documentation and approval by the federal district court.
"Brocade believes that this settlement is in the best interest of its shareholders and the company as it significantly reduces the uncertainty associated with this ongoing litigation.," the company said in a statement. "Further, this resolution enables the company to put the class action behind it and continue to focus on the business of developing and delivering industry-leading data center solutions for its customers worldwide."
In August 2007, a jury found former company CEO Gregory L. Reyes guilty of securities fraud involving a scheme to backdate options grants to the company's employees.
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