Enterasys Networks, Inc. (NYSE: ETS), a Massachusetts-based business network service provider, has announced a settlement in the securities class action against the company pending in the D. of N.H. The proposed settlement is for $50.4 million ($17.4 million in cash and $33 million in shares) and is subject to approval by the court. The settlement also covers related derivative actions against the company that have been brought in New Hampshire and Delaware state court.
Enterasys has been the subject of two securities class actions in the past five years. The current settlement is for the case brought in 2002, following a financial restatement, alleging that the company improperly recognized revenue in violation of GAAP. An earlier securities class action against the company filed in the D. of N.H. in 1998 was dismissed with prejudice by the district court, but the decision was reversed by the U.S. Court of Appeals for the First Circuit in this opinion. According to Enterasys’ most recent quarterly SEC filing, the 1998 case is still pending.