Start Brocade backdating stock options

Brocade backdating stock options

After an internal investigation, Brocade restated its financials, and, according to Brocade’s 1Q06 10-Q subsequently offered to enter a settlement with the SEC.

Executives at Broadcom, Mc Afee and Comverse Technology have been able to evade federal criminal charges, but the defense may have been overconfident in avoiding using witnesses on Reyes' behalf.

Another appeal may be in the works after the latest guilty finding by a jury.

A federal appeals court has thrown out the stock option backdating conviction of Gregory Reyes, the former CEO of Silicon Valley network equipment manufacturer Brocade.

He was the first person to be criminally prosecuted in the Silicon Valley stock option fraud scandal.

The recent media coverage surrounding stock option practices primarily has been focused on options backdating, and to a lesser extent on options springloading.

A new wave of media attention has drawn scrutiny of another options compensation practice – the allegedly improper use of stock options grants in connection with hiring and recruiting of new personnel.

The court found her conviction was valid, but sent her case back to district court for re-sentencing, finding that she had been unfairly punished her for her attorney's actions. Chief Executive Gregory Reyes and his wife, Penny, leave the federal building in San Francisco.

On Tuesday, a federal appeals court tossed out Reyes' criminal conviction.

These hiring related stock options grants are in a different category from the options grants involved in the options backdating investigation – most of the options grants at the center of the options backdating investigation involve options that company officials granted themselves, as opposed to new hires.

While the self-dealing allegedly involved in the options backdating investigation seems more inherently objectionable, the class action lawsuit and the SEC investigation involving Brocade shows that questions associated with hiring-related options grants can still cause companies a lot of problems.

The Amended Complaint, filed April 14, 2006, alleges a variety of hiring related stock options practices designed to provide potential new hires the most potentially lucrative stock options grants.