Federal prosecutors just got their second punch in the gut over the Greg Reyes backdating case: The 9th U.S. Circuit Court of Appeals has explicitly refused to back away from a finding that the government committed deliberate misconduct during trial.

Reyes' securities fraud convictions had been the Northern District of California's highest-profile success in the war against stock-option backdating, because Reyes had been CEO of Silicon Valley darling Brocade. But over the summer an appellate panel threw out those verdicts, finding that Assistant U.S. Attorneys Tim Crudo and Adam Reeves misled the jury by stating that Brocade's finance department didn't know anything about backdating at the company. In fact, it did.

In the aftermath of that opinion, the government didn't ask that the court reinstate the convictions. Rather, it just asked that it eliminate any judgment that Reeves and Crudo acted deliberately. This is a big deal in Justice Department-land: a deliberate misconduct finding triggers an investigation from DOJ's Office of Professional Responsibility, which falls somewhere between root canal and colonoscopy on a federal prosecutor's list of preferred procedures.

On Friday the court issued an amended order, but it only made a factual change; it didn't strike the word "deliberate." A U.S. Attorney spokesman didn't immediately respond to an e-mail, nor did Crudo, who has since returned to a Latham & Watkins partnership.

This article first appeared on the Legal Pad blog on CalLaw.com.