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Cisco settles class action lawsuit

Networking giant is paying nearly £50m to shareholders who claimed they had been misled
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Written by Graeme Wearden on

Cisco has settled a class action suit brought by shareholders who claimed that the company had misled its investors.

The networking giant announced on Friday that it would pay $91.75m (£48.79m) to settle the case, which was filed back in 2001.

"Cisco continues to firmly believe that the suit's claims are without merit, and we have been eager to achieve a victory in this case," said Mark Chandler, senior vice president and general counsel for Cisco Systems, in a statement.

"Given the expense and disruption associated with prolonged litigation, and the fact that this resolution is achieved with no additional cost to Cisco and with the consent of our insurance carriers, we believe this settlement is in the best interest of Cisco and its shareholders," Chandler added.

In the lawsuit, Cisco shareholders claimed that senior executives had acted on insider information when they sold almost $600m of stock in the company before its share price tumbled in 2001 on disappointing financial results.

"Though not required to prove securities fraud, there was a lack of insider trading, and Cisco was not required to make a financial restatement. In light of these litigation risks, we are satisfied that this is a fair settlement that returns value to the class members," said Spencer Burkholz, lead lawyer for Lerach, Coughlin, Stoia, Geller, Rudman and Robbins LLP, counsel for the class.

Cisco said on Friday that the payout, which will be settled by its insurers, will have no impact on its financial position or results of operations.

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