Don' think I saw this one over the past few days, so I offer a rain
drip.
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Jim Mullen, Company Records Specialist
Spirit Aerosystems Inc.
Tech. Services & Process Config., Data & Records
P.O. Box 780008, M/C K32-02
Wichita, KS 67278
(316) 526-0069
mailto:[log in to unmask]
http://engpdirim-upd.web.spiritaero.com/EngPDI-RIM.htm
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Former Brocade CEO Sentenced to 21 Months in Stock Options Case
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01-16-2008 1:49 PM
By JORDAN ROBERTSON, AP Technology Writer
SAN FRANCISCO (Associated Press) -- The former chief executive of
Brocade Communications Systems Inc. was sentenced Wednesday to 21 months
in prison for orchestrating a scheme to tamper with the company's
records of stock option grants.
Gregory Reyes, Brocade's CEO from 1998 to 2005, was also ordered to pay
a $15 million fine.
U.S. District Judge Charles Breyer said Reyes obstructed justice in
preparing for trial, which led to a stiffer sentence.
"This offense is about honesty," Breyer said. "Every time Gregory Reyes
falsified documents, repeatedly, over a three-year period, he was lying.
That is the core of the defendant's criminal conduct."
Reyes was the first executive to be tried over stock options backdating
when his case went before a federal jury in San Francisco in June 2007.
He was convicted in August of 10 counts of securities fraud.
At least a dozen other executives have been criminally charged for
options dealings in a sprawling probe that rattled corporate America and
revealed widespread mishandling of a common tool used to recruit and
retain workers.
About 200 companies have been targeted by Justice Department and
Securities and Exchange Commission investigations, and many have had to
restate their finances, erasing billions of dollars in previously
reported profits and leading to the ouster of dozens of corporate
officers.
Reyes' case has been seen as an important test of how seriously
infractions of options-related securities laws will be punished.
Reyes broke down crying while speaking to the judge before his sentence
was handed down.
"I'm sorry," Reyes said, in between sips of water and long pauses to
compose himself. "There is much that I regret, and if I could turn back
the clock, I would. There were many things I would have done
differently."
Breyer said the 21-month sentence and substantial fine were appropriate
because of the potential backdating schemes had to harm the public's
trust in the accounting of publicly traded companies.
Still, the penalty was below what the sentencing guidelines recommend.
Breyer said he was impressed by Reyes' extensive charitable work and
nearly 400 letters of support for Reyes sent to the court.
"He is the essence of what you want to see from an individual to whom
much is given _ he gives," Breyer said, noting that Reyes received
hundreds of millions of dollars from the sale of Brocade stock.
Reyes was released on his own recognizance and will remain free until a
federal appeals court weighs in on the case. His lawyer, Richard
Marmaro, declined to comment after the hearing.
Reyes was convicted in August on 10 counts, with a jury finding he
retroactively assigned prices to options awards given Brocade employees
and illegally doctored records to hide the true costs of those grants
from auditors and investors.
Prosecutors contended the practice made Brocade appear more profitable
than it actually was, which in turn may have inflated its stock price.
Backdating is illegal only if it's not properly accounted for.
Prosecutors had recommended a sentence for Reyes of 30 to 33 months plus
a fine of more than $41 million and restitution of nearly $90 million to
repay Brocade for its losses and legal fees connected to the case.
Reyes' defense team requested a sentence of no more than 13 months to a
halfway house or home detention.
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