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FalconStor to pay $5 million to settle class-action suit
FalconStor Software Inc., a Melville-based data-storage company, has agreed to pay $5 million to settle a class-action shareholder lawsuit stemming from a federal probe into a bribery scheme involving the company's former chief executive.
The scheme involved FalconStor's former chief executive, ReiJane Huai, and two former salesmen who allegedly paid $300,000 in bribes to executives at JPMorgan Chase & Co. in exchange for $12 million in contracts. Huai committed suicide last year, the day before he was scheduled to plead guilty.
“The agreement to settle the class-action lawsuit represents another significant step forward for our Company and our shareholders,” said Jim McNiel, who took over as chief executive after the scandal broke.
In June, FalconStor agreed to $5.8 million in criminal and civil penalties related to the case.
The company will use a combination of cash and insurance proceeds to pay the settlement, which needs court approval.
FalconStor announced the settlement after the markets closed. The company’s stock was flat in after-hours trading.