Nix, Patterson & Roach selected as Lead Counsel in Brocade Securities Litigation and files Consolidated Class Action Complaint
June 6, 2006
United States District Judge Charles Breyer recently appointed Nix, Patterson & Roach Co-Lead Counsel, and firm client, the Arkansas Public Employees Retirement System (APERS), as sole Lead Plaintiff, in the consolidated securities litigation pending against Brocade Communications Systems, Inc., in the United States District Court for the Northern District of California, San Francisco Division.
On April 14, 2006, APERS filed a Consolidated Class Action Complaint against Brocade, Greg Reyes, Michael Byrd, Antonio Canova and members of Brocade's Audit Committee, as well as Brocade's auditor, KPMG, L.L.P. The Complaint alleges that Defendants engaged in repeated violations of federal securities laws by backdating options grants to top executives and falsified the date of stock option grants and other information regard options grants to numerous employees from 2000 through 2004, which ultimately caused Brocade to restate all of its financial statements from 2000 through 2005.
On July 20, the Securities and Exchange Commission announced that it had filed a civil action against Brocade's former CEO, Greg Reyes, former CFO, Antonio Canova, and former Vice President of Human Resources, Stephanie Jensen for securities fraud.
To view a copy of the SEC Complaint, please click "view SEC Complaint" below.
That same day, the United States Department of Justice announced that it was filing a criminal complaint against Reyes and Jensen for securities fraud and other charges. On August 10, a federal Grand Jury handed down an Indictment against Reyes and Jensen.
To view a copy of the DOJ Criminal Complaint, please click "view DOJ Criminal Complaint" below.
NPR filed a Motion for Partial Modification of the PSLRA Discovery Stay on September 29, 2007.
The Court held a hearing on Defendants' Motions to Dismiss and Lead Plaintiffs' Partial Modification of the PSLRA Discovery Stay, which NPR partners Brad Beckworth and Jeff Angelovich argued for Lead Plaintiff the Arkansas Public Employee Retirement System. At the conclusion of the hearing, the Court granted APERS' Motion for Partial Modification of the PSLRA Discovery Stay, ordering Brocade to produce to APERS all documents previously produced to federal regulators and Brocade's audit committee and special investigative counsel.
The Court also denied the Motions to Dismiss filed by Brocade and its former CEO, Greg Reyes, and CFO, Antonio Canova. Separately, the Court granted the Motions to Dismiss filed by certain former Audit Committee members and outside auditor KPMG LLP. The Court granted APERS leave to amend its claims against the Audit Committee members and/or KPMG.
On January 2, 2007, APERS filed an amended complaint against former Brocade Audit Committee members Larry Sonsini, Seth Neiman, and Neal Dempsey. Those defendants have filed a motion to dismiss, which is set for hearing on June 8, 2007.
To view a copy of the Amended Consolidated Complaint, please click "view Amended Consolidated Complaint" below.
Discovery in this case is ongoing.
APERS and Puerto Rico Government Employees Retirement System object to Brocade Derivative Litigation Settlement. On April 5, 2007, APERS and PRGERS filed an objection to a proposed settlement in the shareholder derivative litigation pending against nominal defendant Brocade and certain former officers and directors. The derivative litigation and proposed settlement does not involve any claims asserted by APERS or other shareholders for damages under the federal securities laws. However, it does affect the claims that Brocade itself may have against the individuals that participated in conduct related to Brocade's accounting errors and restatement of five years worth of financial statements.
The basis for the objection is that the proposed settlement is the result of a collusive settlement process in which the same law firm represented itself, the company, and its named partner, while, at the same time, negotiating a release of all claims Brocade may have against that firm and its named partner. The end result is that the proposed settlement leaves the company and its shareholders with no real relief, while, at the same time, it bars the company from taking action against many of the persons who may be responsible for the Brocade's improper accounting and requires Brocade to continue paying for their legal fees.
The Court held a hearing on this objection on April 27, 2007. Prior to the hearing, the plaintiffs for the derivative case informed the Court that they no longer wished to seek final approval of the settlement and, instead, wanted to "wait and see" what other evidence came to light in the other related proceedings against Brocade and certain officers and directors. In light of the objections raised to this settlement, the Court determined that it would not approve the settlement on April 27, 2007 and instead ordered the plaintiffs and defendants that they should inform the Court by August 2007 whether they still intend to pursue the settlement.
To view a copy of the transcript, please click "view transcript" below.
To view a copy of the objection, please click "view objection" below.
If you have questions or information regarding this case, please contact Brad Beckworth or Jeff Angelovich of Nix, Patterson & Roach.
View Lead Plaintiff Order
View Consolidated Complaint
View SEC Complaint
View DOJ Criminal Complaint
View Lead Plaintiff's Motion for Partial Modification of PSLRA Discovery Stay
View Amended Consolidated Complaint