U.S. News

Brocade Ex-CEO Found Guilty in Options-Backdating Trial

** OMITS REFERENCE TO STEPHANIE JENSEN, WHO HAS NOT BEEN CRIMINALLY CHARGED ** Brocade's former CEO Gregory L. Reyes walks into a federal courthouse in San Francisco, Wednesday, Aug. 2, 2006. Reyes became the first chief executive to be criminally charged over alleged improper accounting of stock options. (AP Photo/Paul Sakuma)
Paul Sakuma

A U.S. jury convicted the former chief executive of Brocade Communications Systemson all 10 counts Tuesday in the government's first criminal options-backdating trial.

The jury returned the verdict in the trial of Gregory Reyes after seven days of deliberations. He could face decades in jail and millions of dollars in fines. Sentencing is scheduled for Aug. 21.

Reyes, 44, was found guilty of 10 counts including conspiracy to commit securities fraud; mail fraud; falsifying books, records and accounts, and making false statements.

He was CEO of the San Jose, California-based data-storage network switch maker from 1998 to 2005.

Ex-Brocade CEO Convicted

He was also the first executive to go on trial on criminal charges stemming from a scandal involving more than 170 U.S. companies that are auditing past stock-option grants or are facing government investigations over backdating of options.

About 100 companies have announced restatements totaling more than $12 billion to account for past stock-option grants.

The outcome of the Reyes trial had been seen as setting a precedent for how aggressively the government would pursue other backdating cases. The U.S. Securities and Exchange Commission also is pressing cases over backdating.