Brocade stock backdating
The verdict, in the Justice Department’s first case to reach trial, could open a floodgate of criminal charges against other executives at companies where stock-option backdating has been identified.Currently, the government has brought criminal charges against at least 10 executives, according to the Associated Press.
The practice made Brocade appear more profitable than it was, the government argued.
But yesterday, Reyes was convicted of all charges after six days of jury deliberations, according to Bloomberg. He still faces civil charges by the Securities and Exchange Commission, as well.
He faces as much as 20 years in prison for the most serious charges, and millions of dollars in fines. Reyes was fired in January 2005 from San Jose, Calif.-based Brocade, the world’s largest maker of switches for data-storage networks.
Reyes’s attorney, Marmaro, stressed that he had no accounting background, and thus relied on the company’s finance department to oversee accounting for stock option grants.
Marmaro at one point argued that Brocade’s history of misdated stock-option grants “begins with Mike Byrd,” the former Ernst & Young partner who had “conceived and approved” the practices at Brocade, according to the attorney.