Feeds

Brocade and ex-CEO could square off in court over failed Cisco buy

SEC moves in

Protecting against web application threats using SSL

The controversy between Brocade and its former CEO Greg Reyes has been kicked up a notch, following a report the parties could face off in court over Brocade's handling of acquisition talks with Cisco.

Reyes intended to sell Brocade to Cisco for $9 a share back in November 2004 - a move that would have caused serious rumbles in the Fibre Channel switch market. The deal, however, collapsed after Cisco learned that the US SEC (Securities and Exchange Commission) had launched an investigation into how Brocade handled stock option grants to new hires during Reyes' tenure as CEO. Now, Reyes is "mulling a shareholder suit, alleging that the investigation by the board's audit committee (into the stock options) did far more to hurt investors than the alleged accounting miscues" by thwarting the Cisco deal, according to a report by BusinessWeek reporter Peter Burrows.

Things between Reyes and Brocade seemed civil enough last year when the former CEO was awarded a lucrative package to stay on as a consultant at the company. Then, a couple of months later, Brocade indicated it would try and get out of the consulting agreement, claiming Reyes wasn't doing the required work.

According to BusinessWeek, the Reyes and Brocade relationship has worsened on a couple of levels.

Reyes told the magazine he's "scared" about the prospect of the SEC bringing civil charges against him and the Justice Department exploring a criminal case over the accounting irregularities. Brocade has restated four years' worth of financial results after an internal audit turned up poor accounting around the stock-based compensation.

Reyes alleges that Brocade directors want to make him a scapegoat as the SEC pursues the Brocade matter. Such concerns have prompted Reyes to consider a variety of legal avenues, including a civil suit against the other directors.

"With possible SEC charges looming, Reyes is pressing his demands," BusinessWeek reports. "He told Brocade he would drop talk of lawsuits if it publicly exonerates him, puts him back on the board, and pays him a rich consulting package it rescinded last summer. But if the government's case is as strong as some insiders close to Brocade hint it is, this big-game hunter may be feeling less like the pursuer and more like prey."

There's more from the magazine here. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
Wanna keep your data for 1,000 YEARS? No? Hard luck, HDS wants you to anyway
Combine Blu-ray and M-DISC and you get this monster
US boffins demo 'twisted radio' mux
OAM takes wireless signals to 32 Gbps
Google+ GOING, GOING ... ? Newbie Gmailers no longer forced into mandatory ID slurp
Mountain View distances itself from lame 'network thingy'
Apple flops out 2FA for iCloud in bid to stop future nude selfie leaks
Millions of 4chan users howl with laughter as Cupertino slams stable door
Students playing with impressive racks? Yes, it's cluster comp time
The most comprehensive coverage the world has ever seen. Ever
Run little spreadsheet, run! IBM's Watson is coming to gobble you up
Big Blue's big super's big appetite for big data in big clouds for big analytics
Seagate's triple-headed Cerberus could SAVE the DISK WORLD
... and possibly bring us even more HAMR time. Yay!
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.