Brocade Communications Systems, Inc. announced recently that it plans on pursuing claims for racketeering against 10 former Brocade officers and directors. As previously reported on this blog, Brocade and its directors and officers have been the subjects of civil and criminal litigation for allegedly improper stock option backdating practices (click here). In June, Brocade paid $160 million to settle securities-fraud claims brought by shareholders over the alleged improper backdating practices.
In a recent court filing, Brocade’s special litigation committee said that it would not assert racketeering claims against the law firm of Wilson Sonsini Goodrich & Rosati or its Chairman Larry Sonsini. Sonsini serviced as both Brocade’s corporate counsel and as a member of Brocade’s board of directors. The special litigation committee also disclosed that the law firm had made a $9.5 million contribution towards the expenses relating to the backdating scandal.