Silicon Graphics to Settle Class-Action Suit

Silicon Graphics Inc., whose computers created images for movies such as “Shrek,” agreed to pay $4 million in cash and 8 million shares worth $20.7 million to settle a class-action lawsuit that accused the company of artificially boosting its stock price.

The company had paid 2.4 million shares to the plaintiffs’ attorneys, the New York-based firm Milberg Weiss Bershad Hynes & Lerach. The rest of the stock will be distributed later this year to shareholders as they are identified, Silicon Graphics said. The terms of settlement weren’t disclosed when the agreement was ratified by a U.S. district judge in January.

Shareholders in the class-action lawsuit alleged Silicon Graphics and its directors made false statements in 1997 and 1998 to artificially increase the price of the company’s stock to facilitate the exchange of a new convertible security for $200 million of outstanding zero-coupon debentures.

The company’s shares rose 9 cents to $2.59 on the Big Board.