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SEC ATTORNEYS FILL RINGSIDE SEATS AT BACKDATING TRIAL The Securities and Exchange Commission is a civil agency � when it brings fraud charges against a company or an executive, it’s not bound by the same standard of intent or knowledge as the Department of Justice is when it brings a criminal case. But the SEC has had at least three lawyers � and often a couple more � at just about every day of the criminal trialof former Brocade Communications CEO Gregory Reyes. That case, involving backdated stock options, is now in the jury’s hands, and no one’s too keen to predict which way it’ll go. While the company admitted to having options improprieties, the prosecution had a hard time proving that Reyes knew how to properly account for options. That challenge has gotten plenty of press, and the SEC has kept that issue in mind as it pursues new charges. “We look at these cases and we obviously know what’s going on with Reyes,” said Carlos Vasquez, an SEC staff attorney. “When you don’t have the e-mails showing knowledge, it’s very difficult.” Vasquez was speaking last week about a case he handled: On Wednesday, the commission announced that it had reached a settlementwith Integrated Silicon Solution Inc. and that company’s former CFO, Gary Fischer. While the company only agreed to an injunction against violating securities laws in the future, Fischer has to pay more than $500,000. In his settlement, the SEC outlined exactly why he should have known better. For example, in e-mails in 2000, Fischer explained exactly what kind of compensation charges the company could avoid by backdating options � and suggested trying to conceal the fact that they were backdated. “This is a case where you had a chief financial officer who you can show had knowledge,” Vasquez said. In the hazier Reyes case � where the government’s assertion that the defendant knew how backdated options should appropriately be accounted for rests on far softer ground � the jury was beginning its sixth day of deliberations on Monday morning. While the panel has given little indication of how it’s leaning, it requested readbacks of testimony last week that focused almost exclusively on whether Reyes had knowledge of the accounting requirements � and whether he tried to cover up the backdating.

Justin Scheck

BRANDO STILL GETS ATTENTION Start with deceased actor Marlon Brando, add a demented woman in her 80s, top it with a scoop-hunting reporter from a nationally broadcast television program, and what have you got? An entertaining appellate court ruling that proves Brando is still stirring interest more than three years after his death. On Thursday, Los Angeles’ Second District Court of Appeal held that the producers of “Celebrity Justice,” a now-canceled TV showthat reported on legal proceedings involving famous individuals, had every right to be interested in Brando’s will. When Brando � who won Oscars for his roles in 1954′s “On the Waterfront” and in 1972′s “The Godfather” � died at the age of 80 on July 1, 2004, he left a will that disinherited some heirs while providing for a couple of trusted friends. One friend was Blanche Hall, the actor’s housekeeper from 1963 until some unspecified date, according to Thursday’s ruling. Hall was to get monthly payments of undisclosed amounts from a living trust established by Brando’s will. That interested producers of “Celebrity Justice,” who sent reporter Joe Tobin to interview Hall at a retirement home on July 12, 2004. The 82-year-old suffered from dementia and Alzheimer’s disease. Thursday’s opinion in Hall v. Time Warner Inc.,07 C.D.O.S. 9236, noted Hall hadn’t known Brando was dead or that she was a beneficiary. Tobin’s on-camera interview with her was edited to a three-minute segment on the show. In November 2005, Hall’s relatives filed a suit claiming Tobin had circumvented the retirement home’s security measures and clandestinely recorded Hall’s “virtually incoherent” responses. The relatives went after Time Warner Inc. and three other companies that produced “Celebrity Justice” for claims including trespass, intentional infliction of emotional distress and elder abuse. The companies filed a motion to strike the suit under the state’s anti-SLAPP statute, arguing that their reporting was in furtherance of their rights to free speech. Los Angeles County Superior Court Judge Robert Hess denied the motion, but the Second District reversed that order. “The public’s fascination with Brando and widespread public interest in his personal life made Brando’s decisions concerning the distribution of his assets a public issue or an issue of public interest,” Justice H. Walter Croskey wrote. Though a private person, Hall “nevertheless became involved in an issue of public interest” by being named in the will, Croskey wrote. “The defendants’ television broadcast,” he added, “contributed to the public discussion of the issue by identifying Hall as a beneficiary and showing her on camera.” Justices Patti Kitching and Richard Aldrich concurred. The justices ordered the trial court to determine whether Hall’s family has demonstrated a probability of prevailing, then enter a new order on the motion to strike.

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