Read The Recorder‘s roundup of the stock-option backdating scandal. There won’t be a test later … but there might be a subpoena.
In the same order Friday, Breyer also rejected Reyes’ request to subpoena Maxim, the company where Michael Byrd, Brocade’s former chief financial officer, had worked.
Reyes alleges that Byrd devised the stock option backdating scheme while at Maxim, then brought it to Brocade, but Breyer felt the inquiry into Byrd and his activities at Maxim were irrelevant.
“It is immaterial where the scheme began, or who furnished the financial know-how necessary to design it; what matters, for purposes of Reyes’ trial, is whether he helped implement the scheme and perpetuate it,” Breyer wrote.
The case against Reyes and another former Brocade executive is the first to stem from the Department of Justice’s ongoing investigation of numerous companies into whether stock options were fraudulently tied to dates that would give the options holders the maximum return.
The legal and technology communities have been closely watching the case to see how the court handles evidence garnered in internal probes and parallel civil prosecutions, and how it weighs the level of cooperation by companies and their executives.
