A day after former Brocade CEO Gregory Reyes was found guilty on all 10 securities fraud charges brought against him, dozens of Silicon Valley executives--and hundreds of executives nationwide--faced with the same allegations, will have to re-think their defense strategies.
The sweeping verdict in the first-of-its-kind criminal case for the U.S. Justice Department sent a seismic ripple through this region yesterday. And the aftershocks will continue until we see the next trial begin, and the creative defenses that will now need to be constructed since the obvious ones didn't seem to work.
Reyes--and so many others--claimed no legal culpability because there was no personal financial gain. Buzzzzzzz. Wrong.
Reyes argued that he didn't know what his financial team was up to so therefore couldn't be held responsible for their actions. Buzzzzzzz. Wrong again. This jury apparently found that the buck really does stops with the CEO.
Reyes claimed ignorance about specific securities laws that he was apparently unaware that he was breaking. Buzzzzzzz. Wrong and wrong. The trial lasted six weeks. Hundreds of thousands of pages of exhibits. Seven full days of deliberation. This jury wasn't buying it.
So what happens next. There's been a fair amount of attention on Steve Jobs as the highest profile potential target for the feds. Not quite. True, the Justice Department investigation into him and his company continues, but the SEC already ended its investigation with action only against two of Jobs' underlings. Further, those feds lauded Apple for the company's tremendous cooperation during the investigation. Jobs used many of the same arguments that Reyes did: he didn't benefit personally; he didn't know what his finance lieutenants were doing.
But the Justice Department will likely lend a large amount of deference to the SEC's findings and despite the Reyes conviction, likely won't bring charges against the Apple chief. Still, what had been a dormant news story will likely rear its ugly head again for those bloggers and reporters looking for a story that likely isn't one.