Brocade Communications Systems Inc. agreed to pay $160 million to resolve a securities class-action lawsuit over the company's stock-options backdating practices, the largest settlement to date for an options manipulation case.
Brocade, the biggest maker of switches for data-storage networks, said in a statement distributed on PR Newswire that it recorded an expense of $160 million on a pretax basis.
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The accord resolves lawsuits filed against Brocade in 2005 after the company restated financial results because of misreported stock-based compensation. Gregory Reyes, the company's former chief executive officer, was convicted of fraud for backdating hundreds of employee grants in 2001 and 2002 and sentenced to 21 months in prison and a $15 million fine.
“Brocade believes that this settlement is in the best interest of its shareholders and the company as it significantly reduced the uncertainty associated with this ongoing litigation,” the company said in a statement.
Brocade paid $7 million last year to settle a U.S. Securities and Exchange Commission lawsuit over backdating.
Leslie Davis, a Brocade spokeswoman, didn't immediately return a message left on voicemail.