Feeds

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

SEC moves in

Top three mobile application threats

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talk of lawsuits if it publicly exonerates him, puts him back on the board, and pays him a rich consulting package it rescinded last summer.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. ®

High performance access to file storage

More from The Register

next story
This time it's 'Personal': new Office 365 sub covers just two devices
Redmond also brings Office into Google's back yard
Kingston DataTraveler MicroDuo: Turn your phone into a 72GB beast
USB-usiness in the front, micro-USB party in the back
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Inside the Hekaton: SQL Server 2014's database engine deconstructed
Nadella's database sqares the circle of cheap memory vs speed
BOFH: Oh DO tell us what you think. *CLICK*
$%%&amp Oh dear, we've been cut *CLICK* Well hello *CLICK* You're breaking up...
Just what could be inside Dropbox's new 'Home For Life'?
Biz apps, messaging, photos, email, more storage – sorry, did you think there would be cake?
IT bods: How long does it take YOU to train up on new tech?
I'll leave my arrays to do the hard work, if you don't mind
Amazon reveals its Google-killing 'R3' server instances
A mega-memory instance that never forgets
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.