AFFILIATED COMPUTER SERVICES

(NYSE:ACS)

DISCUSSION: Affiliated computer is now named in a lawsuit related to alleged backdating of stock option grants to both its former and current chief executive. The Dallas-based company has admitted that it granted stock options to executives with effective dates that "generally proceeded" dates approved by the boards compensation committee. Also, the company was named as a nominal defendant in a lawsuit by shareholders against CEO Mark King, the current chief executive, and former Chief Jeff Rich. Former CEO Rich denies any backdating. The company is accused of breaches of fiduciary duties in connection with the option grants awarded to some executive officers from 1996 to 2002. After the SEC opened an informal investigation into the way the company granted options, ACS began its own internal investigation.

SIGNALS: On March 6, 2006 the company said it had been notified by the SEC that the agency was conducting an informal investigation into Affiliated Computer's option grants from October 1998 through March 2005. ACS received a grand jury subpoena from the Southern District of New York on May 17 concerning the pricing of stock options granted to its senior executives. Jeff Rich resigned as the company's chief executive and as a director on September 29, 2005.

ALTERA CORP.

(NASDAQ:ALTR)

DISCUSSION: Altera Corp. has announced that it may have to restate 10 years of financial statements because of the way it had been improperly accounting compensation for some executives. This is due to its alleged practice of backdating stock option grants. Altera has launched an internal investigation, which will add "several million dollars" to costs this quarter. The grants in question were given between 1996 and 2000. During this time, it is believed that actual and recorded grants were booked differently. There are alleged inconsistencies on the books.

SIGNALS: On May 25, 2006 the company announced that it had received a subpoena from the U.S. attorney regarding stock option practices and the SEC had opened an inquiry into its granting practices.

AMERICAN TOWER CORPORATION

(NYSE:AMT)

DISCUSSION: A class action suit has been filed against wireless development company, American Tower Corp. and some of its senior executives. The suit alleges violations of federal securities laws. This is in connection with the company's public statements about its stock option practices and related accounting. An individual shareholder also filed a shareholder derivative suit against some of American Tower's current and former officers and directors for alleged breach of fiduciary duties.

American Tower Corp. announced on Jul 28, 2006 that an internal audit has found discrepancies in the way stock option grants in the past were granted to executives and that the company may need to take certain charges after its findings are concluded. The company found that the dates used to account for options in its financial reports differed from dates officially recorded.

SIGNALS: American Tower is a technology sector company that has launched an internal investigation in the way it grants stock options. Both the Chief Financial Officer (CFO) and Chief Executive Officer (CEO) received the majority of his/her compensation in stock options. In May, American Tower announced that it had received inquiries regarding its stock option grants from the United States Department of Justice and the Securities and Exchange Commission. American Tower has also disclosed the receipt of subpoenas from federal attorneys in New York. American Tower announced that it may have to restate previous financial earnings.

BROCADE COMMUNICATIONS SYSTEMS

(NASDAQ:BRCD)

DISCUSSION: A case against Brocade Communications Systems is now pending in the United States District Court for the Northern District of California. On April 19, 2006, San Jose, California-based Brocade had lost 68 percent of its stock value over the past 5 years, and required a 67 percent majority for amending its charter and bylaws. Brocade responded that it has improved its financial performance significantly since November of 2005 and its stock price had gone up as well. Brocade said it would delay filing its annual report with the SEC as its independent auditors complete their review of the company's financial statements for fiscal 2005. Accounting firm KPMG LLP is also auditing the effectiveness of Brocade's internal controls over its financial reporting as of October 29, 2005. Accounting firm KPMG LLP is also auditing the effectiveness of Brocade's internal controls over its financial reporting as of October 29, 2005. Brocade has been under investigation by the SEC and the U.S. Department of Justice for the way it accounted for stock options from 2001 to 2004. On June 20, 2006, Brocade Communications Systems Inc. said it will pay from $3.5 million to $4.5 million to employees who agree to amend or cancel discounted stock options.

SIGNALS: In May 2006, Brocade named Richard Deranleau, who served as interim CFO since December, to that post full time after his predecessor, Tony Canova resigned as Chief Financial Officer in the midst of a probe by the SEC and Justice Department into stock options expensing. On November 18, 2005, Nicholas G. Moore resigned from the Board of Directors of Brocade. On January 12, 2006, Brocade Communications stated that it was delaying the filing of its annual report with regulators, saying it's still providing information its accounting firm needs to complete the fiscal 2005 audit. This is a technology company.

BROOKS AUTOMATION

(NASDAQ:BRKS)

DISCUSSION: A case against Brooks Automation was filed in the Superior Court of the Commonwealth of Massachusetts on May 23, 2006 alleging the company's breach of its fiduciary duty in regards to some of its stock option grants. Brooks allegedly accounted for certain matters concerning stock options incorrectly, and as a result recognized less compensation expense than it should have in periods prior to this fiscal year. On April 26, 2006, Brooks announced that it had created a special committee to conduct an internal review of matters related to past stock option grants, including the timing of such grants and associated documentation. On July 17, 2006, Brooks Automation, a technology sector company, stated that it would pay $175 million to one of its bond owners. Brooks stated that this payment would be made promptly and that this payment would bring its cash and cash equivalents to around $160 million. As of December 31, Brooks had $353 million on the books. The company's ability to file its quarterly report for period ended March 31 has been indefinitely delayed by the company's own internal investigation, an investigation which could mask the actual compensation of its top officials. Currently this delay in filing has put Brooks in default with a major bondholder because the filing is over 60 days late.

SIGNALS: On May 12, 2006 Brooks Automation announced receipt of an informal inquiry letter by the SEC regarding option grants and on May 19 was served with a grand jury document subpoena from the U.S. Attorney for the Eastern District of New York requesting records pertaining to the granting of stock options. Two board members have since resigned and announced that they will renounce all of their current stock options and restricted stock awards, whether vested or not. In late October 2002, the then Chief Financial Officer, Ellen B. Richstone, resigned from the company to pursue other opportunities. Brooks announced that it will restate its financial statements from fiscal years 1999 through 2005.

FOUNDRY NETWORKS, INC.

(NASDAQ:FDRY)

DISCUSSION: Foundry Networks Inc. has been accused in a lawsuit of concealing negative earnings, enabling top executives to sell their stock in the company before prices fell. The San Jose-based company, a networking switch and router maker, closed at $9.44 on July 28, 2006, but it is still far off its high of $212 in March 2005. Allegations assert that Foundry and its executives, made positive but false statements about Foundry's business and future revenues during October and November 2000, artificially inflating the price of the Company's stock. The complaint alleges top executives sold or registered to sell a total of $113 million worth of stock during the period covered by the lawsuit. Most of this was before mid-November 2005, when it is alleged that Foundry Networks released a 10-Q containing many new disclosures involving its customers and raising money, and that Foundry had provided vendor financing to fuel some of its growth. It is alleged that Foundry's stock continued to trade at artificially inflated levels as defendants continued to make public statements that demand was strong and that Foundry's biggest problem was keeping up with demand. The suit covers purchasers of common stock between October 18, 2000 and December 19, 2000.

SIGNALS: Foundry Networks' stock options awards have become the subject of an SEC inquiry. On June 27, 2006, Foundry announced that it had received a grand jury subpoena issued by a California U.S. District Court requesting documents related to the company's granting of stock options from 1995 to present. The company also announced that it had received an information inquiry letter from the Securities and Exchange Commission requesting documents regarding it's stock option grants. Foundry previously announced that it had received a subpoena from Justice Department prosecutors relating to its option granting practices. Foundry is a Technology sector company.

UnitedHealth Group

(NYSE:UNH)

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VITESSE SEMICONDUCTOR CORP.

(NASDAQ:VTSS.PK)

DISCUSSION: Vitesse Semiconductor has been named in a lawsuit, in part, for the alleged backdating of stock option grants. The allegations of securities fraud also claim that Vitesse misstated its financial reports with regard to its accounting of product returns. The alleged dates of these practices may have effected shareholders of the stock who purchased between January 28, 2003 and April 28, 2006. Vitesse has appointed a special committee of independent directors to conduct an internal investigation in the matter of the company's stock option grants including their timing, accounting and documentation. The internal investigation was expanded to include the company's practices in regards to credits issued to and requested by customers and the related accounting treatment, and the application of payments received to the proper accounts receivable.

SIGNALS: In May 2006 the company's board fired its CEO, CFO and an Executive VP while being investigated by the Securities and Exchange Commission (SEC). The former executives, Louis R. Tomasetta, Yatin Mody and Eugene F. Hovanec respectively, had been placed on administrative leave by Vitesse in April because of their involvement with issues related to the integrity of documents concerning Vitesse's stock option grant process. Vitesse has stated that reported financial statements for the three months ending December 31, 2005 and the three years ending September 30, 2005, and possibly earlier periods, should not be relied upon. The company delayed the filing of its quarterly results, restated results, and as of June 28, 2006 has been de-listed from NASDAQ National Market as a result of the company's inability to file financial statements. The company currently trades in the "Pink Sheets".

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