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February 12, 2005

Nishan Systems founder settles suit against VCs

Mercury News reports that Aamer Latif, founder of Silicon Valley-based storage networking company Nishan Systems, has settled a lawsuit he filed against the company's venture capitalists, alleging they had cheated him and other shareholders when the VCs decided to sell Nishan to McData Corp. for about $90 million in September 2003.

In the December 2003 suit, Latif had alleged that ComVentures (and its General partner Roland Van der Meer); Lightspeed Venture Partners (and its general partner Gill Cogan); Robert Russo (CEO of Nishan); John McGraw (Chairman of Nishan's board); McData Corp.; and investment bank Credit Suisse First Boston engaged in fraudulent vote-buying to garner common shareholder votes needed to approve the acquisition. Among other claims, the suit alleged that the venture capital firms stacked the Nishan board so as to promote their own financial interests at the expense of Latif and other common shareholders. Along with punitive damages for fraud, vote-buying, and other infractions, the suit had sought a redistribution of the merger proceeds.

The details of the latest settlement, which was reached last month, were not revealed.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.