Corporate & Securities Law

First Convicted Backdater Sentenced to Prison

The former chief executive officer of Brocade Communications Systems was sentenced to 21 months and prison and ordered to pay a $15 million fine. He is the first executive to go to trial and be convicted for orchestrating a scheme to illegally backdate stock options.

According to The Wall Street Journal, Reyes broke down crying while speaking to the judge before his sentence was handed down. The sentence no doubt will send shock waves throughout Corporate America. Indeed, at least one dozen other executives have been criminally charged in options cases, according to the Associated Press.

In August, a federal jury convicted Reyes on all 10 felony counts. Reyes was charged in July 2006 on 12 felony counts of securities fraud and other offenses, although the two mail-fraud charges were subsequently dropped.

First Convicted Backdater Sentenced to Prison

Full post as published by inside Sarbanes Oxley on January 16, 2008 (boomark / email).