Comverse expected to pay up to $300 million to settle class-action over backdating stock options

Comverse Technology is finalizing a settlement with investors who filed a class-action lawsuit against the software maker to recoup losses related to backdated stock options. The telecommunications software maker is expected to pay out between $150 million and $300 million.

The settlement, which must be approved by the U.S. District Court where it was filed before it can be implemented, is part of Comverse's preparations before it resumes publication of full financial reports, a step scheduled for February.

Comverse has not published financial statements since March 2006, several months after the U.S. Securities and Exchange Commission filed civil charges against three former senior executives, first and foremost founder and former leaderJacob "Kobi" Alexander, had reach made millions of dollars from a decade-long fraudulent scheme to illegally backdate stock options for themselves and others.

The main plaintiff in the class action suit, which was filed in the United States, is the Menora Mivtachim insurance company, which suffered heavy losses due to the alleged backdating.

According to the June 2009 settlement Comverse reached with the SEC, the company did not admit or deny the allegations, but consented to a permanent injunction against any future violations of U.S. federal securities laws. The SEC did not impose a fine on Comverse.

After the scandal broke, Comverse founder and former Alexander fled to Namibia, where he is facing fighting extradition to the United States. Alexander left the United States in mid-2006, shortly before he was charged with 35 counts of felony. He was arrested in Namibia two months later after Interpol issued an international warrant for his arrest.

Comverse, Inc., which provides communications companies with software such as voice mailboxes, text messaging and multimedia transmission services for cellular telephones, is one of four Comverse subsidiaries.

The others include Verint Systems, which specializes in sophisticated audio and video recording systems and competes with NICE Systems; Ulticom, which sells software solutions to cellular networks; and Starhome, a little-known company that specializes in roaming services for cellular service providers.

Ulticom, Comverse, Inc. and Verint had been relegated to the pink sheets, the secondary list of the Nasdaq stock exchange, because they were not publishing audited financial statements due to the backdating affair. However, Ulticom was recently relisted for trade on the regular Nasdaq exchange after resuming the publication of quarterly statements.