A lawsuit has been filed in the United States District Court for the Northern District of California on behalf of persons who acquired the common stock of Brocade Communication Systems, Inc. (NASDAQ: BRCD) between February 21, 2001, and May 15, 2005, inclusive (the "Class Period").
The complaint alleges that, Brocade and certain of its officers violated the Securities Exchange Act of 1934 by announcing financials that did not comply with Generally Accepted Accounting Principles and materially inflated the company's stock price. Specifically, the complaint alleges that the company improperly accounted for the cost of stock-based compensation; failed to follow appropriate option granting guidelines; and lacked adequate internal controls.
Since the beginning of the year, the company has issued a number of announcements belying its earlier release financials. On January 6, 2005, Brocade announced that it would restate its FY2002 and FY2003 financials to account for additional stock-based compensation expenses. On January 24, 2005, Brocade announced that it expected to record further stock-based compensation charges. And on May 16, 2005, the Company announced that it would restate its FY2002 through FY2004 financials to account for still additional charges for stock-based compensation expense. Since these announcements, the company's stock price has fallen over 42%.
If you are a member of the class as described above, you may move the Court no later than July 18, 2005 to serve as a lead plaintiff for the class and to select lead counsel. A lead plaintiff is a representative party who acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiff. Your ability to share in any recovery is not affected by your decision whether or not to serve as a lead plaintiff.