Former Brocade CEO Found Guilty in Options Backdating Suit Retrial

March 30, 2010 ( - A federal jury on Friday convicted former Brocade CEO Gregory Reyes on nine out of 10 felony counts relating to the backdating of stock options.

According to The Recorder, the jury in the retrial, which deliberated for 3 1/2 days, asked questions toward the end of deliberations which suggested they were having trouble believing that there was a conspiracy between Reyes and former Brocade human resources chief Stephanie Jensen. The jury ultimately acquitted Reyes of that count.       

Last August, the 9th U.S. Circuit Court of Appeals ordered a new trial in the stock option backdating case because of what the court said was prosecutorial misconduct (see Backdating Conviction Thrown Out Amid Misconduct Charges). Reyes was convicted of conspiracy and fraud in August 2007 for backdating employee stock options, sentenced to 21 months in prison, and given a $15 million fine.      

The news report said prosecutors told U.S. District Judge Charles Breyer that they would ask the court to revisit his loss calculation, which could ramp up the sentencing guidelines. After Breyer discharged the jury, Assistant U.S. Attorneys Adam Reeves and David Anderson told the judge that the government would have additional information for him to use in calculating how much loss Reyes caused. In the first trial, the 21-month sentence for Reyes was based on a calculation of zero loss.       

Sentencing for Reyes is set for June 24.