Feeds

Magistrate rejects ex-Brocade chief's dismissal application

Heading towards trial

Choosing a cloud hosting partner with confidence

An attempt by former Brocade executives to have the charges against them for stock option irregularities dismissed was denied by a federal magistrate.

They are the first high-profile targets of a massive SEC investigation linking dozens of firms to the practice of backdating options. Ex-chief executive Greg Reyes and ex-human resources VP Stephanie Jensen were charged with securities fraud on 20 July.

Lawyers for the pair argued on Wednesday that backdating had been done to attract employees, not skew financial reporting, AP reports. Reyes' attorney Richard Marmaro said: "Nowhere in this affidavit does it allege the defendants intended that consequence." Magistrate Edward Chen replied it was a "fair inference".

Prosecutor Christopher Steskal said fasifying financial statements was "the reason they falsified the record".

Jensen's counsel John Keker pleaded her ignorance of accounting. He said: "She knows nothing from nothing about the accounting function. What she did, she thought, was completely proper."

Chen declined to grant the dismissal however. The next hearing will take place in a federal court in San Francisco on 30 August. It will determine whether there is enough evidence against the pair to go to trial.

The SEC alleges Brocade execs sought to inflate the value of option packages by changing dates of board meetings to make it appear options were granted sooner than they were. Employment offer dates were backdated to low points for the company's share price too, the authorities allege, granting their recipients an instant profit.

Although not illegal in itself, backdating can lead to financial submissions becoming distorted. The prosecution says it was behind the need for Brocade to restate five years of results between 1999 and 2004.

The storage switch maker has sought to distance itself from the case. Its 20 July statement said: "No executive officers involved in the historical stock option granting practices remain employed with Brocade."

The firm has set aside $7m to cover a settlement offer it has made to the SEC. ®

Top 5 reasons to deploy VMware with Tegile

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
'Kim Kardashian snaps naked selfies with a BLACKBERRY'. *Twitterati gasps*
More alleged private, nude celeb pics appear online
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.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
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.