Brocade Communications Systems Inc. Case 07/20/2001

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Company Name(s): 
Brocade Communications
Case Name: 
Brocade Communications Systems Inc. Case 07/20/2001
Case Status: 
Lawsuit Filed
Case Status: 
Judgment Issued
Case Status: 
Settlement Proposed
Case Status: 
Settlement Approved
Affected Securities
NASDAQ: BRCD
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
07/20/2001
Class Period Begin: 
05/18/2000
Class Period End: 
05/15/2005
Court of Filing: 
United States District Court for the Southern District of New York
Date Settled: 
10/23/2008
Settlement Amount: 
$160,098,000
Deadline to Participate in Settlement: 
03/30/2009
Summary: 

12/12/2008 - Settlement Proposed

According to a press release a Federal Court has ordered notice be given to investors who purchased or otherwise acquired the common stock of Brocade Communications Systems, Inc. (”Brocade”) between May 18, 2000 and May 15, 2005, informing them that a class has been certified and that a settlement of $160,098,500 has been proposed. This settlement will be comprised of the following payments: (i) $160,000,000 by defendant Brocade Communications Systems, Inc. (”Brocade”) and (ii) $98,500 by defendant KPMG LLP (”KPMG,” and collectively with Brocade, the “Settling Defendants”). A hearing will be held before the Honorable Charles R. Breyer in the United States District Court for the Northern District of California, San Francisco Division, U.S. Courthouse, 450 Golden Gate Avenue, 19th Floor, Courtroom 8, San Francisco, CA 94102 at 10:00 a.m., on January 23, 2009 to determine whether: (1) the proposed settlement should be approved by the Court as fair, reasonable, adequate and in the best interests of the Class; (2) Class Counsel’s application for an award of attorneys’ fees and reimbursement of expenses and Class Representatives’ application for reimbursement of costs and expenses should be approved; (3) the Court should dismiss with prejudice and release all claims against the Settling Defendants and current and former Brocade officers and directors Gregory Reyes, Antonio Canova, Larry Sonsini, Seth Neiman, and Neal Dempsey relating to the conduct alleged in this case; and (4) the Court should rule on such other matters as the Court deems appropriate. If approved, the Settlement will resolve all claims in this litigation as further described in the full printed Notice of Class Action, Proposed Settlement, Motion for Attorneys’ Fees and Fairness Hearing (the “Notice”).

According to the press release members of the class described above may be entitled to share in the settlement fund and their rights will be affected whether they act or not. Those who have not yet received the full printed Notice and/or Proof of Claim and Release form (”Proof of Claim”) explaining, among other things, how to make a claim to participate in the settlement or how to exclude themselves from the settlement, may obtain copies of these documents from the Claims Administrator or you can contact the Shareholders Foundation, Inc. under mail@ShareholdersFoundation.com

07/20/2001 - Lawsuit Filed

In a statement on Monday the San Jose-based data management company Brocade Communications Systems Inc. announced it agreed to settle a shareholders class action for $ 160 Million in exchange for dismissal of all claims over the alleged options backdating scandal, that already have led to a criminal conviction of former chief executive Gregory Reyes of criminal fraud and conspiracy charges related to his role in stock option grant dates in order to artificially inflate their value. Former chief executive Gregory Reyes was sentenced to 21 months in federal prison in January. A San Francisco federal court ruled May 13th, 2008 that Brocade was financially liable for Gregory Reyes’ conduct. The Brocade settlement is the largest to date among dozens of cases filed in the nationwide scandal over options backdating. 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.

The settlement remains subject to final approval by court. Brocade said the payment will be reflected as an expense in its quarterly report and said “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 shares of Brocade fell slightly in after-hours trading following the settlement announcement, to $7.90.