Ex-Brocade CEO Reyes gets 18 months for stock back-dating
'Man of integrity' now a shell
Disgraced ex-Brocade CEO Greg Reyes, who appealed in 2007 against a 21-month prison sentence for stock option backdating, has been given an 18-month term in the slammer plus a $15m fine.
Reuters reports that this was given to him by the same judge who had initially sentenced him three years ago, and it works out at $33,708 a night inside.
Reyes' backdating has proved to be a costly enterprise; he's previously paid $12.5m to settle a Brocade-initiated lawsuit.
Some 400 friends, family members and colleagues reportedly wrote to the judge asking him to be lenient, which he said was remarkable, but he also pointed out Reyes had lied in court.
Reyes' lawyer Stephen Neal read out a statement on behalf of his client who was too distraught to do it himself. In the statement Reyes declared: "I am a shell of the man I once was."
Neal went on to gush: "I find Greg Reyes a man of extraordinary integrity. I would trust him with everything in my life, from my family to the shirt off my back."
That cut no ice with the judge, who said he had to uphold the law relating to corporate integrity.
Reyes' colleague in the backdating, ex-Brocade HR head Stephanie Jensen, got a four-month jail term in 2008 plus a fine of $1.25m. This is subject to an appeal.
Back-dating stock options meant that executives awarded the options could realise them by buying the stocks at a much lower price than at the time of the stock option grant, and thus make substantially larger gains. Brocade has paid $160m to settle a class-action lawsuit pursued by aggrieved investors as well as $7m to settle fraud charges.
Reyes' lawyers said he might appeal once more. He certainly does not want to go to prison, which unless this last appeal succeeds he is due to do on 10 September. ®
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