Vitesse Settles Stock-Related Lawsuits

Vitesse Semiconductor Corp. has settled all legal claims connected to allegations of stock option backdating, the company announced. Camarillo-based Vitesse will 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. Vitesse CEO Christopher Gardner said he was pleased to settle the litigation because it had become a distraction to company executives, employees, customers and shareholders. The settlement of federal and state derivative actions 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, 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. Vitesse retains the right to continue its state court action against KPMG, its former auditing firm. The company seeks $100 million from KPMG over allegations of professional malpractice.