According to the firms' 10-K filing dated 3/26/1999, Ancor was a defendant in a consolidated class action captioned In re Ancor Communications, Inc. Securities Litigation, Case No. 97-CV-1696 (D. Minn.) alleging violations of the federal securities laws. The lawsuit was settled in November 1998 and dismissed by the district court on February 5, 1999. Pursuant to the terms of the settlement, a fund was created in the amount of $1,650,000. The Company paid $250,000 of the total settlement and the remaining $1,400,000 was paid by the Company's insurer. The $250,000 payment by the Company was recorded as an expense in the third quarter of 1998.

According to a Press Release dated 7/29/97, the complaint alleges that Ancor and certain of its officers and directors violated the Securities Exchange Act of 1934 by making a series of false and misleading statements regarding, among other things, a "$30 million" contract with Sequent Inc., the acceptance of Ancor's products in the market, revenue and earnings for the second and third quarters of 1996, revenue for the fourth quarter of 1996, and the adequacy of reserves to cover returns of Ancor's products.