In re FalconStor Software, Inc.

OPINION OF THE COURT

Emily Pines, J.

Plaintiffs, two shareholders of the nominal defendant, FalconStor Software, Inc. (FalconStor or the company), commenced this shareholders’ derivative action, asserting that under the direction and watch of the company’s board of directors, several of its employees engaged in an unlawful scheme to bribe JP Morgan Chase Bank, N.A. (JP Morgan) so that it would purchase FalconStor’s data protection products. Plaintiffs set forth that as a result of the scheme, the company entered into a deferred-prosecution agreement with the U.S. Attorney’s Office for the…