Read The Recorder‘s roundup of the stock-option backdating scandal. There won’t be a test later … but there might be a subpoena.
“No one believed that the company was committing securities fraud,” he said.
Marmaro also spoke extensively about the lack of clarity in options accounting rules. “Brocade’s own controller, an experienced CPA, did not even know how to apply the guidelines,” he said.
At the same time, Marmaro pointed repeatedly to the role of former Brocade CFO Michael Byrd in implementing the options grant process. Byrd is currently cooperating with the government under an immunity deal.
After opening statements, the government began its case with the testimony of Colleen Burgess, a former Brocade HR employee who said she was explicitly told by former HR director Stephanie Jensen to pick low dates for option grants.
Burgess said that when it was time to award options each quarter, Jensen � now awaiting trial on securities fraud charges � had her print out a Brocade stock chart from the Yahoo finance Web site.
“I would highlight the low points in the quarter that we would like to pick stock options on,” Burgess said.
By the end of the day Monday, the courtroom crowd had thinned out. After a cross examination of Burgess that focused on altering options documents to make up for administrative mistakes, the government called a second HR employee, Stephen Beyer. His testimony was expected to wrap up Tuesday; the entire trial is predicted to take two months.
