Vitesse Semiconductor Corp. received preliminary approval to settle lawsuits stemming from allegations of stock option backdating and accounting manipulations. A final hearing has been scheduled for March in U.S. District Court in Los Angeles. The settlement of federal and state derivative actions against Camarillo-based Vitesse involves former CEO Louis R. Tomasetta, former Executive Vice President Eugene F. Hovanec and former Chief Financial Officer Yatin Mody releasing the company from any future costs of defense related to U.S. Securities and Exchange Commission and Justice Department investigations. Tomasetta, Hovanec and Mody were terminated from the company in May 2006 amid an investigation by the SEC into the granting of stock options. In December 2006, a special committee of the company’s board reported that former senior management improperly backdated the dates of stock options over a number of years at a cost to the company at about $120 million. The settlement requires Vitesse to adopt certain corporate governance measures. The company will also pay $10.2 million into a fund to settle class action lawsuits filed by shareholders in 2006. The money comes from the liability insurers for the company’s officers and directors; and from two former executives.
