SEC charges ex-Brocade CFO in backdating scheme
Friday, August 17th, 2007The U.S. Securities and Exchange Commission charged Brocade Communications Systems former chief financial officer with fraud on Friday, saying he disregarded indications other executives were backdating stock options.
The SEC said Michael Byrd learned of instances in which Brocade’s former CEO and others were backdating options for certain people, but did not ensure the company properly accounted for the expenses and disclosed them to investors.
A U.S. jury convicted the former Brocade CEO Gregory Reyes earlier this month in the government’s first criminal trial of options backdating.
Brocade has already agreed to pay a $7 million civil penalty to settle charges of fraudulent stock option backdating.
The SEC said Reyes repeatedly granted “in-the-money” options to employees and executives, but signed backdated grant paperwork to avoid reporting significant expenses.
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Byrd received information indicating this misconduct but did not fully determine its scope or ensure the options were properly accounted for, the SEC said.
An attorney for Byrd did not immediately have a comment on the charges.
The agency also said Byrd received a backdating option grant in 2001, and filed a disclosure statement with the SEC with a false grant date.
The SEC is seeking disgorgement of ill-gotten gains and civil monetary penalties.
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