Fidelity settles lawsuit over access to ‘business-critical’ Broadcom software

By Nate Raymond

BOSTON, Jan 23 (Reuters) – Fidelity Investments said on Friday it had reached an agreement to settle a lawsuit accusing Broadcom of threatening to cut off its access to software that had become central to the financial firm’s systems, creating a risk of outages and trading disruptions.

The Boston-based asset manager moved to voluntarily dismiss a lawsuit it filed in a state court in Massachusetts in November, after Broadcom agreed to continue providing its services and software to one of its subsidiaries, a Fidelity spokesperson said.

“Broadcom’s services to Fidelity will continue uninterrupted, and there will be no impact on Fidelity’s business operations, customers, associates, or business partners,” the spokesperson said in a statement.

The deal was announced ahead of a hearing that was set for next week on a request by Fidelity Technology Group for an injunction that would prevent Broadcom from terminating its access to the “business-critical” software.

Broadcom did not immediately respond to a request for comment.

According to the lawsuit, Fidelity has used “virtualization” software sold by VMware to create, host and manage virtual servers on its physical servers since 2005. That software over time became central to Fidelity’s operations, the lawsuit said.

In 2023, Broadcom completed an acquisition of VMware and revamped its product lineup by repackaging its virtualization products into “expensive” bundles of products, Fidelity said.    

Fidelity said that when it sought to renew its subscription to the software, Broadcom declined to honor its right to do so pursuant to its contract with VMware and insisted it buy a bundle instead.

Fidelity, which has around 50 million customers and $17.5 trillion in assets under management, said without access to that software, outages would result across its platforms, customers would be unable to access their accounts or execute trades, and its employees would lose access to key internal systems.

(Reporting by Nate Raymond in Boston, Editing by Alexia Garamfalvi and David Gregorio)