Juniper Networks has agreed to pay a massive $169 million fee to settle a class-action lawsuit with New York Clity pension funds and other investors over a backdated stock options scandal.
Backdating is the practice of retroactively changing the date of when employee stock options are granted to a time when the purchase price was lower to boost the recipient's profit. While backdating itself isn't illegal, it is when a company fails to disclose the compensation costs to government regulators and shareholders.
The class-action lawsuit claims that from June 1999 through 2003, Juniper's former general counsel Lisa Berry and other Juniper executives concealed a backdating scheme that resulted in the overstatement of income from 1999 to mid-2006, eventually requiring the company to pay $894.7m in pretax charges.
Juniper's general counsel, Mitchell Gaynor, said in an emailed statement that the lawsuit arose from events that occurred more than six years ago and that the practices have "long been eliminated" with new controls in place.
"We are pleased to put this longstanding matter behind us and do not expect the payment of this settlement to have any ongoing effect on our business operations," Gaynor said.
The company settled charges over its options practices with the US Securities and Exchange Commission in 2007 without admitting wrongdoing or paying a fine.
In 2007, the SEC also filed fraud charges against Berry for her alleged role in the backdating scandal. That case is still pending.
Juniper creates 'Junos Ready' ops
On Thursday, Juniper Networks also said it has setup a new business group to create new applications for its Junos operating system and get more third-party developers in on the act as well.
The new Junos Ready Software business group will be lead by 11-year Juniper veteran Manoj Leelanivas. It will focus on the company's mobile solutions push, "Project Falcon;" Juniper's network application platform Junos Space, and a new partner program for wooing third-party devs to make Junos apps.
Juniper's recently updated corporate image attempts to set itself apart from market leader Cisco by promoting the Junos ecosystem as more "open" to carriers and third-party developers making their own custom applications for specific networking needs.
Leelanivas said in a statement that the new business group's initial task will be drawing up a roadmap for Project Falcon — an important task as Cisco begins to roll out the first products based on its $2.9bn purchase of mobile expert Starent Networks. ®
This article was updated to include a statement from Juniper regarding the settlement.