Shareholders Win Settlement in Comverse Suit
Law firms representing shareholders of Comverse Technology have reached a settlement stemming from the alleged stock option backdating practices of the former directors and officers of the communications technology company.
Former CEO Jacob Kobi Alexander will contribute about $60 million to the settlement. The companys former general counsel and CFO are contributing over $1 million, and Comverses former auditor, Deloitte & Touche, is contributing $275,000.
Alexander fled to Namibia in 2006 to avoid federal fraud charges related to the options backdating scheme and is continuing to fight extradition to the U.S. His contribution will assist Comverse in funding the overall $225 million class-action settlement announced earlier this month. Much of the rest of the settlement money is coming from insurance carriers and from Comverse itself.
Under the settlement, Comverses former general counsel William Sorin and former CFO David Kreinberg will collectively pay more than $1 million to Comverse, in addition to previous payments they made to the SEC. Several other defendants who were previously members of Comverses compensation committee will collectively forfeit 155,500 outstanding unexercised options.
Other parties participating in the settlement include Deloitte and several former members of the companys board.
A $62 million settlement was announced Monday by the firms Milberg LLP and Barroway Topaz Kessler Meltzer & Check, LLP, which represented derivative plaintiffs in New York State Supreme Court, and Bernstein Litowitz, which represented derivative plaintiffs in an action pending in the U.S. District Court for the Eastern District of New York. The $225 million settlement for the class-action lawsuit was announced earlier this month by another law firm, Pomerantz Haudek Frossman & Gross, which represented the lead plaintiff, the Menora Group, an Israeli insurance company.
In addition to obtaining payments in excess of $62 million, Comverse agreed to undertake significant corporate governance reforms, including making the chairman of the board an independent director, and separating the positions of chairman and CEO.