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Former Brocade CEO Greg Reyes Sentenced to 18 Months; Counsel Blames Lawyers for Failure to Catch Stock Option Backdating

Posted in Securities Fraud, Sentencing

From Law.com, the former Chief Executive Officer of Brocade Communications Systems, Inc., Gregory Reyes was sentenced to 18 months in prison yesterday in U.S. District Court for the Northern District of California for securities fraud and backdating stock options. The government had sought a 37 month sentence and a loss amount of $137 million.

Reyes’ counsel attempted to argue that his lawyers should have done a better job in advising Reyes. U.S. District Judge Charles Breyer apparently found the argument an interesting one, stating "Yes, it’s not a bad question to ask, ‘Where were the lawyers?’" However, the Court rejected the argument, finding that Reyes was a sophisticated executive who understood what he was doing.

Reyes was first tried and convicted on the charges in 2006 and was sentenced to 21 months’ imprisonment. However, the Ninth Circuit Court of Appeals reversed his conviction last year based on prosecutorial misconduct in interfering with witness testimony. Reyes was tried a second time in February and March of this year, and was convicted on nine counts. During the trial, Reyes’ counsel blamed Brocade’s outside counsel, attorneys with the law firm of Wilson Sonsini Goodrich Rosati, for failing to catch stock option backdating. However, Reyes’ trial counsel never called anyone from the firm to testify. One of the documents at issue in the case was drafted by two experienced attorneys.

The Court received over 400 letters on Reyes’ behalf.

  • http://www.philippine-lawyer.com/ Philippine Lawyer

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