The criminal trial against Gregory Reyes, the former Brocade Communications Systems Inc. chief executive who is charged with 10 felony counts of securities fraud and other offenses, began Monday in a packed federal courtroom, according to The Associated Press.
Reyes's case is the first to go to trial alleging criminal offenses connected to suspect timing of stock-option awards. The Securities and Exchange Commission has investigated more than 100 companies over so-called backdating, the AP reported.
Reyes is accused of falsifying directors' meeting records, signing off on false financial statements, and lying to the company's financial auditors and investors to hide that the company should have been paying compensation expenses for options grants that already had value at the time they were awarded, the AP reported.
Jurors will decide whether Reyes intentionally concealed information about the company's options grants to avoid recording hefty compensation expenses and boost the bottom line, as Assistant U.S. Attorney Tim Crudo argued. Or they may determine that Reyes believed the financial statements accurately accounted for the grants, as Reyes's defense lawyer, Richard Marmaro, said, the AP reported.
Reyes is being tried separately from Stephanie Jensen, Brocade's former vice president of human resources, who was charged with the same 12 counts as Reyes, the AP reported.
-New York State Society of Certified Public Accountants
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