Law360 Reports on Robbins Umeda LLP’s* Derivative Suit against Ernst & Young, Blue Coat Executives
On August 20, 2010, Law360 reported that Ernst & Young and former executives of Blue Coat Systems, Inc. (NASDAQ:BCSI), a proxy-server and manufacturer technology company, agreed to pay nearly $4 million to Blue Coat to settle two shareholder derivative suits in connection with alleged stock options backdating. Represented by Robbins Umeda LLP and other firms, the Blue Coat shareholders claim the company and certain executives backdated and “spring-loaded” stock options, alleging that since 1999, stock option grant dates were manipulatively tied to days when the stock price was low or to dates just before the company announced positive news.
In addition to payment to the company, the settlement calls for Blue Coat to make a number of corporate governance changes, including disgorgement of bonuses paid to the CEO or CFO if the company has to restate financial statements because of the CEO’s or CFO’s recklessness or intentional misconduct; making two-thirds of the board of directors independent; and minimum stock ownership rules for directors and officers; among other reforms.
In re Blue Coat Systems, Inc. Derivative Litigation, No. 5:06-cv-04809 (N.D. Cal.).
Chartier, et al v. Hanna, et al., No. 1:05-CV-041436 (Cal. Super Ct.-Santa Clara County).
* The firm name changed from Robbins Umeda LLP to Robbins Arroyo LLP on January 1, 2013.