Feeds

SEC hits former Brocade CEO first in operation 'Options Fiasco'

The new Martha Stewart

Top 5 reasons to deploy VMware with Tegile

You can slap an apron on Greg Reyes and hand him a rolling pin. The US Securities and Exchange Commission (SEC) has just turned the former Brocade CEO into the Martha Stewart of the options expensing scandal.

The SEC today hit Reyes with criminal and civil charges, alleging that the CEO backdated stock options to make compensation packages more lucrative for new workers. According to the SEC, Reyes then failed to expense the option awards properly. Reyes has become the first major executive to be charged by the SEC as part of a far-reaching probe into how companies handled stock option expenses.

The SEC has also accused Brocade's former CFO Antonio Canova and human resources VP Stephanie Jensen of helping Reyes conduct the options operation.

Richard Marmaro, a lawyer for Reyes, hit back against the SEC, saying his client "is innocent" and willing to "prove his innocence in a court of law."

"It is surprising that in an area where the government is investigating at least 60 companies on allegations of stock options accounting irregularities, the government would choose to charge Mr. Reyes. Mr. Reyes is not even alleged to have granted himself any of the options at issue in the case, nor is there even an allegation that he made any money through the alleged option irregularities," Marmaro said. "All he did was what his Board authorized him to do. During a time where competition was extremely high in Silicon Valley for employees, he awarded options to new and current employees of the company - from the receptionist to engineers - to attract and retain talent."

The options question is part of the dot-com hangover still haunting Silicon Valley. Technology companies reworked the dates of options grants in the hopes of creating more competitive pay packages during a fierce hiring boom here.

Storage switch maker Brocade hired a new CEO in January of 2005 after an internal audit turned up accounting irregularities around the way options were handled. The company maintained an amicable relationship with Reyes at first, handing him a lucrative consultancy package. Later, however, Brocade moved to sever ties with Reyes and argued that he had not been performing the consultant duties as expected.

Later in 2005, the SEC announced a formal probe into Brocade's bookkeeping.

Brocade has been forced to restate past financial results on numerous occasions. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
NSA SOURCE CODE LEAK: Information slurp tools to appear online
Now you can run your own intelligence agency
Azure TITSUP caused by INFINITE LOOP
Fat fingered geo-block kept Aussies in the dark
NASA launches new climate model at SC14
75 days of supercomputing later ...
Yahoo! blames! MONSTER! email! OUTAGE! on! CUT! CABLE! bungle!
Weekend woe for BT as telco struggles to restore service
Cloud unicorns are extinct so DiData cloud mess was YOUR fault
Applications need to be built to handle TITSUP incidents
BOFH: WHERE did this 'fax-enabled' printer UPGRADE come from?
Don't worry about that cable, it's part of the config
Stop the IoT revolution! We need to figure out packet sizes first
Researchers test 802.15.4 and find we know nuh-think! about large scale sensor network ops
SanDisk vows: We'll have a 16TB SSD WHOPPER by 2016
Flash WORM has a serious use for archived photos and videos
Astro-boffins start opening universe simulation data
Got a supercomputer? Want to simulate a universe? Here you go
prev story

Whitepapers

Driving business with continuous operational intelligence
Introducing an innovative approach offered by ExtraHop for producing continuous operational intelligence.
10 threats to successful enterprise endpoint backup
10 threats to a successful backup including issues with BYOD, slow backups and ineffective security.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
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?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.