Brocade communications systems backdating mandating health initiatives
In his second trial, Reyes’ attorneys made what legal experts said was a potentially risky decision: They opted not to call any witnesses in his defense, arguing instead that the government had failed to prove its case.Attorneys on both sides declined to discuss the verdict Friday, although defense lawyer Stephen Neal said he will likely file another appeal.Reyes was the most prominent local executive to face criminal charges after the government launched an investigation into the handling of stock options at dozens of valley companies.His first conviction, after a highly publicized trial in 2007, was set aside by an appellate court.Citing evidence that Brocade board members and financial officers were also aware of the backdating, or even took part in it, Neal argued that Reyes relied on the finance officials to ensure that Brocade was complying with complex and confusing accounting rules.
But even though prosecutors argued during Reyes’ trial that he had conspired with Jensen, the jury appeared to struggle with understanding Jensen’s role.Outside the courtroom, Reyes appeared shaken and declined to comment.It was the second trial for Reyes, once a rising star in Silicon Valley’s tech industry, in a case that called into question some widespread methods of rewarding employees and executives at local companies.But many in Silicon Valley wondered why he was singled out for what appeared to be a common practice in the early part of last decade, when Silicon Valley was experiencing tremendous growth and successful tech companies competed to attract talented employees by handing out stock options that made many people rich.Authorities said Reyes and others profited from receiving backdated options, which allowed them to buy Brocade stock at lower prices than outside investors paid.
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For the second time, a federal jury has found former Brocade Communications CEO Gregory Reyes guilty of securities fraud and related charges in a closely watched case that grew out of a wide-ranging investigation into the backdating of stock options in Silicon Valley.