SOURCE: Stull, Stull & Brody

June 08, 2005 18:03 ET

Stull, Stull & Brody Announces Class Action Against Brocade Communication Systems, Inc.

NEW YORK, NY -- (MARKET WIRE) -- June 8, 2005 -- Notice is hereby given that a class action lawsuit was filed on June 7, 2005, in the United States District Court for the Northern District of California on behalf of all persons who purchased the securities of Brocade Communication Systems, Inc. ("Brocade" or the "Company") (NASDAQ: BRCD) between February 21, 2001, and May 15, 2005, inclusive (the "Class Period").

The complaint alleges that, Brocade, Gregory L. Reyes and Antonio Canova with violations of the Securities Exchange Act of 1934. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that Brocade improperly accounted for the cost of stock-based compensation; (2) that Brocade did not follow appropriate option granting guidelines; (3) that the Company lacked adequate internal controls; and (4) that as a consequence of the foregoing the Company's financial results were in violation of Generally Accepted Principles and were materially inflated at all relevant times.

On January 6, 2005, Brocade announced that as a result of an internal review it expected to restate its financial statements for fiscal years ending 2002 and 2003 to record additional stock-based compensation expense. The news shocked the market. On January 7, 2005, shares of Brocade fell $0.52 per share or 7.51 percent to close at $6.40 per share. On January 24, 2005, the Brocade announced that it expected to record additional stock-based compensation charges. On this news shares of Brocade fell another $0.57 per share or about 10 percent, on January 24 and January 25, 2005, to close at $5.83 per share. Then, on May 16, 2005, before the markets opened, the Company announced that it will restate its financial statements for the fiscal years ending 2002 through 2004 to record additional charges for stock-based compensation expense. On this news shares of Brocade fell $0.12 per share or 2.91 percent, on May 17, 2005, to close at $4.01 per share.

If you purchased Brocade Communications securities during the Class Period, you may request that the Court appoint you as lead plaintiff by July 18, 2005. A lead plaintiff is a representative party that 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, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Stull, Stull & Brody, or other counsel of your choice, to serve as your counsel in this action. Stull, Stull & Brody has litigated many class actions for violations of securities laws in federal courts over the past 30 years and has obtained court approval of substantial settlements on numerous occasions. Stull, Stull & Brody maintains offices in both New York and Los Angeles.

If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Tzivia Brody, Esq. at Stull, Stull & Brody by e-mail at SSBNY@aol.com, by calling toll-free 1-800-337-4983, or by fax at 212/490-2022, or by writing to Stull, Stull & Brody, 6 East 45th Street, New York, NY 10017.

Contact Information

  • Tzivia Brody, Esq.
    Stull, Stull & Brody
    6 East 45th Street
    New York, NY 10017
    e-mail: Email Contact
    toll-free 1-800-337-4983
    fax 212/490-2022