Feeds

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

SEC moves in

Beginner's guide to SSL certificates

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talk of lawsuits if it publicly exonerates him, puts him back on the board, and pays him a rich consulting package it rescinded last summer.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

Security for virtualized datacentres

More from The Register

next story
It's Big, it's Blue... it's simply FABLESS! IBM's chip-free future
Or why the reversal of globalisation ain't gonna 'appen
'Hmm, why CAN'T I run a water pipe through that rack of media servers?'
Leaving Las Vegas for Armenia kludging and Dubai dune bashing
Facebook slurps 'paste sites' for STOLEN passwords, sprinkles on hash and salt
Zuck's ad empire DOESN'T see details in plain text. Phew!
CAGE MATCH: Microsoft, Dell open co-located bit barns in Oz
Whole new species of XaaS spawning in the antipodes
Microsoft and Dell’s cloud in a box: Instant Azure for the data centre
A less painful way to run Microsoft’s private cloud
AWS pulls desktop-as-a-service from the PC
Support for PCoIP protocol means zero clients can run cloudy desktops
prev story

Whitepapers

Choosing cloud Backup services
Demystify how you can address your data protection needs in your small- to medium-sized business and select the best online backup service to meet your needs.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.