News

posted on 03 June 2008 09:30

Brocade agreed to repay $160 million to investors in recompense for the backdated options scandal. It closes the book, hopefully, on the class-action lawsuit.

Brocade was legally liable for ousted CEO Greg Reyes' conduct in the matter, according to a San Francisco court judgement. Brocade agreed to pay up so as to end a costly legal process that had no clear chance of Brocade's innocence being proved.

In a statement it said: "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."

In January ex-CEO Greg Reyes was sentenced to 21 months in prison and fined $15 million for his stock option backdating actions which, by setting the start date for options at a lower stock price increased the profits available to option holders when they sold their stock. Stephanie Jensen, the ex Brocade HR head was jailed for 4 months in March and fined $1.4 million.

Backdating of options is a now a clear no-no for business. The settlement of $160 million is the largest stock option backdating settlement to date. The court still has to formally assent to the arrangement.

^{[Chris Mellor.]}