Brocade settles Federal securities lawsuit

Brocade Communications has reached an agreement in principle with lead plaintiffs to settle a Federal securities class-action lawsuit originally filed in May 2005.

The action was brought in the US District Court for the Northern District of California against the storage company and a number of its former directors and officers.

The litigation relates to the company's restatement of financial results in 2005 owing to stock-based compensation accounting issues.

Under the terms of the preliminary settlement, Brocade will pay $160m to the plaintiff class in exchange for the dismissal with prejudice 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 issued today.

"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 centre solutions for its customers worldwide."

Brocade said that the $160m "settlement expense" is not expected to impact its non-GAAP results of operations.