Read The Recorder‘s roundup of the stock-option backdating scandal. There won’t be a test later … but there might be a subpoena.
“The prosecution misled the jury” by saying that Reyes had fooled Byrd, Marmaro wrote.
“As the prosecution knew,” he added, “defense counsel’s argument � that Mr. Byrd knew all about the Geruson look-back � was exactly right.”
In its complaint, the SEC says Byrd knew Geruson’s options were dated to October 2001 when he didn’t actually start work at the company until 2002.
“As Byrd was aware, Geruson did not begin work at Brocade � part-time or otherwise � until February 2002,” the complaint says. “Byrd also did not reveal this discrepancy to the company’s external auditors.”
The SEC also says Byrd received backdated options for 800,000 shares of stock.
In a phone interview Friday, Susan Fleischmann, the lead SEC lawyer on the case, and the San Francisco office’s enforcement chief, Marc Fagel, said the complaint is based on information � and witnesses � the defense had access to.
“There’s no evidence that’s referred to in our complaint that wasn’t available to the defense,” Fagel said.
“How they chose to put on their defense was what they chose to do,” Fleischmann added.
But Byrd’s lawyer, John Potter of Quinn Emanuel Urquhart Oliver & Hedges was nonplussed Friday. In a prepared statement, he said the SEC complaint stood in contrast to the successful Reyes prosecution.
“As the lead prosecutor correctly observed in closing argument, there was absolutely no evidence suggesting that Mr. Byrd had any awareness of the option practices at issue,” he wrote, adding that “the SEC’s complaint against Mr. Byrd advances a radically different theory, one completely at variance with the voluminous evidence presented during the recent Reyes trial.”
