Complete coverage of the stock-options backdating scandal from the legal front.

Hot Topics Table of Contents

Apple Backdating Case Settles for $14M

The National Law Journal
Sept. 11, 2008

The deal ends 14 federal derivative actions and five state suits against the company.

SEC Charges Tiny Tech Maker Over Options

The Recorder
Sept. 10, 2008

Executives ignored their corporate lawyers’ advice (“don’t backdate”) and later performed an unimpressive inquiry, regulators suggest.

Wilson Sonsini Named in Backdating Suit

The Recorder
May 2, 2008

A new derivative action filed against backdating poster child Brocade makes the rare move of naming its outside firm as a defendant.

Alsup Rejects Easy Derivative Deals

The Recorder
April 24, 2008

Michael Torpey, the head of Orrick, Herrington & Sutcliffe’s securities litigation practice, says Judge William Alsup’s orders in two derivative cases may change how the hundreds of such suits are settled.

CFO Charged for Backdating Exercise Grants

The Recorder
April 21, 2008

A former executive at Mercury Interactive faces criminal tax counts for allegedly fudging dates when she exercised option grants.

Patel Wary of Piercing Privilege

The Recorder
February 26, 2008

The San Francisco federal judge did not sound inclined to grant former McAfee GC Kent Roberts’ request for interview notes from the company’s stock option backdating investigation.

Feds: Reyes Owes Brocade $90 Million

The Recorder
January 14, 2008

The government says former Brocade CEO Gregory Reyes should reimburse the company’s legal costs — including the $46 million tab for his stock option backdating trial.

Oracle Bid Adds Wrinkle to BEA Suit

The Recorder
December 17, 2007

A derivative suit over BEA Systems’ back-dating problems throws in the company’s rejection of Oracle’s $6.7 billion takeover bid to argue that directors screwed up.

Brocade Witness Balking

The Recorder
December 11, 2007

Ex-Brocade CEO Gregory Reyes could escape a jail sentence if a judge grants his motion for new trial, which claims a prosecution witness is backing off her testimony.

Indicted GC Wants Discovery from Howrey

The Recorder
December 11, 2007

Former McAfee General Counsel Kent Roberts says the law firm that investigated McAfee’s stock option backdating might have useful information for him.

Rambus Escapes SEC Backdating Charges

The Recorder
December 7, 2007

The firm had widespread options irregularities and a large restatement, but a thorough internal investigation may have mitigated.

Second Brocade Exec Guilty of Backdating

The Recorder
December 6, 2007

Human resources chief Stephanie Jensen is convicted of falsifying company books and conspiracy. “I had to follow the law,” says one juror.

Backdating Charges for Another Tech Firm

The Recorder
December 5, 2007

The SEC has gone after Maxim Integrated Products, its former CEO and its ex-CFO for improperly backdating stock options.

Ex-KLA GC Finds Life After Backdating

The Recorder
November 28, 2007

The guy who refused to be a “war time counselor” for his backdating boss may be the first general counsel to escape the tar of the stock-options scandal.

Apple Escapes Another Options Suit

The Recorder
November 21, 2007

For the second time this month, a judge tosses a backdating-fueled shareholder suit against the iPod giant.

SEC Cuts Verisign Loose on Backdating

The Recorder
November 16, 2007

The company that had a $160 million earnings restatement and lost three top execs as the controversy swirled won’t face regulatory punishment.

SEC Gives Pass in Some Backdating Probes

The Recorder
November 13, 2007

At least five Silicon Valley companies have recently reported that the SEC has told them it won’t take action over their stock option granting practices.

SEC Cases Pose Gray Area for State Bar

The Recorder
October 26, 2007

Several California GCs have quit or been fired under suspicion of backdating, or even — like ex-Apple lawyer Nancy Heinen — civilly charged. A look from the State Bar could undermine criticism that the agency focuses its discipline on small fry.

SEC Tells Marvell, Exec to Expect Suits

The Recorder
October 17, 2007

The backdating-plagued semiconductor maker and one of its prime executives have received Wells notices — meaning securities investigators plan to seek financial penalties.

Prosecutors Seek Tougher Rules for Reyes

The Recorder
September 24, 2007

Prosecutors’ preliminary sentencing submission in the Gregory Reyes case focuses on later effects of backdating at Brocade Communications — which would lead the judge to use recent, stricter guidelines in sentencing the former CEO.

SEC Taps on Jobs’ Shoulder

The Recorder
September 21, 2007

Apple CEO Steve Jobs got hit with an SEC subpoena in the course of regulators’ case against former GC Nancy Heinen. Legal observers say it was only a matter of time.

Judge Skeptical of Apple Backdating Suit

Legal Pad
September 7, 2007

Judge Jeremy Fogel seemed skeptical of a class action against Apple that tried to link options improprieties to some kind of loss by shareholders. While the stock was rising.

SEC Stumbles on Privilege

The Recorder
September 7, 2007

SEC lawyers no longer ask companies to waive privilege as backdating investigations touch on advice of counsel. But they’d really, really like you to offer.

CNET Escapes SEC Net on Backdating

The Recorder
September 5, 2007

The online publisher pushed out a bunch of executives last year and had to make a nine-figure earnings restatement — but government regulators decide not to prosecute anyone.

Ex-KLA, Juniper GC Charged in Backdating

The Recorder
August 29, 2007

Lisa Berry is accused of masterminding the backdating practices at two former employers as SEC officials try to include behavior that falls outside the statute of limitations.

The Wages of Backdating

The Recorder
August 21, 2007

It ain’t just securities lawyers keeping busy with stock options improprieties. Labor, insurance and global equity lawyers like Baker & McKenzie’s Valerie Diamond have felt the ripple effects, too.

No Deal: SEC Charges Ex-CFO of Brocade

The Recorder
August 20, 2007

Michael Byrd helped the government convict his former boss, Greg Reyes, but his deal with the SEC divided the commission and ultimately collapsed.

Brocade Exec Guilty on All Counts

The Recorder
August 8, 2007

Former Brocade CEO Gregory Reyes was convicted on all 10 counts in his high-profile backdating case, a surprise to a defense team that maintained no connection between Reyes and backdating activity had been proven.

CEO’s Wife Used Web to Defend Rambus

The Recorder
August 1, 2007

Under an online alias, the wife of Rambus CEO Harold Hughes would defend him and his backdating-plagued company, while criticizing his enemies. It might not look kosher, but will the company get into trouble?

Fogel Tosses Mercury Securities Suit

The Recorder
August 1, 2007

San Jose federal judge Jeremy Fogel told plaintiff lawyers they’ll have to come up with much more if they hope to make fraud claims against Mercury Interactive stick.

Reyes Case Speeds Toward Quick End

The Recorder
July 25, 2007

The former Brocade CEO’s trial over backdating will end this week — without some high-profile testimony that had been expected.

Judge Grills Reyes Prosecutors

The Recorder
July 9, 2007

Judge Charles Breyer gave the assistant U.S. attorneys handling the nation’s first backdating prosecution until Monday morning to explain how their evidence amounts to a crime.

Reyes Team Files Dismissal Motion

Legal Pad
July 3, 2007

Lawyers for the ex-CEO of Brocade argue the prosecution hasn’t linked Greg Reyes to the firm’s practices. Give it a read …
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Smudgy Line Between Reyes, Backdating

Legal Pad
July 2, 2007

Prosecutors rested without making an unequivocal connection between Brocade’s former CEO and its rampant backdating of stock options.
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Reyes Defense Gets Key Opening

The Recorder
June 29, 2007

Prosecutors at the trial of the former Brocade CEO brought up other companies’ options practices, letting Gregory Reyes’ lawyer point out just how common backdating was — and how low-key the market’s reaction has been.

Brocade Case: Worst Witness Ever?

Legal Pad
June 25, 2007

That surprise witness who was gonna destroy Gregory Reyes’ defense? Less surprising, and less destructive than expected.
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Rough Day for Backdating Defense

The Recorder
June 21, 2007

Richard Marmaro wasn’t able to exclude damning (but rather context-free) testimony in the trial of ex-Brocade CEO Gregory Reyes, and that was just the start of a long morning.

Brocade Witness Surprises Reyes Team

The Recorder
June 20, 2007

Judge Charles Breyer will decide Wednesday whether to allow unexpected testimony that the former CEO of Brocade Communications acknowledged to an underling that backdating was “illegal.”
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Brocade Trial Opens With Intent Defense

The Recorder
June 19, 2007

Richard Marmaro agrees that his client, as CEO of Brocade Communications, used backdated options to attract talent. But he says there was no intent to commit fraud.

Breyer Puts Wilson Sonsini on the Spot

The Recorder
April 30, 2007

U.S. District Judge Charles Breyer wondered why Wilson Sonsini Goodrich & Rosati continues to represent Brocade in civil litigation over backdating, given the law firm’s longtime securities work for the company.

McAfee Case a Warmup for Roberts?

The Recorder
April 13, 2007

The trial of McAfee’s former CFO may feature the first testimony from a key informant against the company’s ex-general counsel, Kent Roberts — one of the highest-profile backdating cases.

Options Morass Swamps Sonsini

The Recorder
March 29, 2007

Wilson Sonsini and its star partner, Larry Sonsini, have been on the scene of many high-profile backdating cases. A firm e-mail unearthed by an SEC subpoena may pull them in deeper.

Firm Has Millions in Troubled Clients

The Recorder
March 29, 2007

Wilson Sonsini’s investment fund took lucrative stock positions in clients with backdating problems. Like its Brocade options, worth $18 million-plus when the firm exercised them.

Brocade Judge Quashes Attorney Subpoena

The Recorder
March 26, 2007

Judge Charles Breyer didn’t take long to decide an informant’s attorney doesn’t have to submit to a deposition in the civil case against accused stock option backdaters.

Former McAfee GC Indicted Over Options

The Recorder
February 28, 2007

The long-expected indictment of Kent Roberts came Tuesday as local federal prosecutors decided to issue their indictment without the SEC. McAfee’s former general counsel is charged with backdating options and trying to cover it up.

Attorney Error Discloses Backdating Docs

The Recorder
February 21, 2007

An Orrick associate thought he was filing under seal a copy of a complaint his firm had fought for months to keep out of the media. Apparently not, and the papers are now public.

SEC Blamed for Delay in McAfee Indictment

The Recorder
February 15, 2007

The Securities and Exchange Commission wants to coordinate its backdating case against the former McAfee GC with an expected federal indictment — and is holding up everything.

Corruption Cheers Insurance Lawyers

The Recorder
February 14, 2007

The heyday of giant asbestos battles is passing, but attorneys who fight over insurance claims see a future in corporate misbehavior.

Brocade Attorneys Take Shot at Killing Case

The Recorder
February 8, 2007

While Judge Charles Breyer seemed interested in some defense arguments, it’s not likely that motions to do away with either civil or criminal charges will succeed.

Immunity Brings New Conflict in Brocade

The Recorder
January 26, 2007

When the government deposed witnesses in the backdating investigation, they had temporary immunity, and talked. With the defense, they took the Fifth, and the defense ain’t happy.

Shakeups Cloud Direction of Apple Probe

The Recorder
January 23, 2007

It had seemed that prosecutors were most interested in Steve Jobs and Apple’s legal staff. With the U.S. attorney’s office losing its head, will the case stay on course?

Apple Prosecutor Leaves for Fenwick

The Recorder
January 22, 2007

The same week federal prosecutors interviewed Steve Jobs about backdating, Christopher Steskal talks about dropping the case he spearheaded to lead Fenwick & West’s white collar practice.
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Apple Quietly Canned Lawyer Who Backdated

The Recorder
January 8, 2007

A new player surfaces in Apple’s stock options mess — the low-ranking in-house lawyer who filled out apparently falsified documents, and was fired as the controversy kicked up.

Apple Filings Back Jobs, Blame Others

The Recorder
January 2, 2007

Executives no longer at the company are blamed for “mistakes” such as records of meetings that never happened in connection with backdating.

Board of Buddies No Help to Jobs

Legal Pad
December 28, 2006

A new complaint observes that Apple’s admitted backdating problems exactly coincide with Steve Jobs returning to the company — and bringing friends to the board. Ditto Pixar.

Jobs Hires Big Apple Lawyer?

Legal Pad
December 27, 2006

We hear the Apple CEO has his own New York lawyer to handle issues of backdated stock options.

Faked Docs May Be Core of Apple Case

The Recorder
December 26, 2006

With all the backdating, it’s hard to tell who to indict. Securities lawyers say that falsified documents — the kind involved in Apple’s stock options — are one way to prove a company had intent to defraud.

Breyer to Hold Brocade Papers in Camera

The Recorder
December 26, 2006

The ex-CEO’s lawyer wins his bid to get documents away from Brocade, but can’t get his hands on him until later. Maybe.

McAfee Suit Reveals New Options Dynamic

The Recorder
December 19, 2006

Because of the backdating mess, a self-imposed blackout period at McAfee has allegedly caused some former employees to lose vested stock options. They’re not going away quietly.

McAfee GC in Backdating Crosshairs

The Recorder
December 15, 2006

Kent Roberts, fired as McAfee GC over some, ah, curious dating of stock option grants (his own) is expected to be indicted any day now.

Advising a Board? Better Brush Up on Your People Skills

The Recorder
December 4, 2006

When dealing with a board of directors, don’t underestimate the importance of people skills.

Jury Brocade Case Offers Endless Twists

The Recorder
November 30, 2006

An attorney’s alleged mad “fishing expedition,” accidental disclosure of internal SEC e-mails, concurrent civil and criminal cases, and Judge Charles Breyer his usual no-nonsense self — The Brocade backdating imbroglio is a case to watch.

Jury Acquits, Hangs in McKesson Trial

The Recorder
November 6, 2006

Shaky witnesses for the prosecution were cited as two McKesson Corp. executives were acquitted on one charge in a securities fraud scandal, with the jury hanging on the rest.

Reed Smith Nabs Sec Prosecutor

The Recorder
November 2, 2006

Another firm adds an SEC veteran to its ranks amid the latest flood of corporate governance scandals.

Bingham Grabs Backdating Prosecutor

The Recorder
October 25, 2006

Haywood Gilliam picked the right time to trade his backdating prosecutions in the U.S. attorney’s office for the backdating de-fense work at Bingham McCutchen.

Sanmina GC Hangs On Amid Options Storm

The Recorder
October 16, 2006

General counsels may be walking around wearing big backdating targets, but Sanmina-SCI’s Steven Jackman survived an executive purge last week. He appears to be one of only two general counsel who have kept their jobs even though they were at the company when improper options grants occurred.

Ousted CNET Lawyer Got Options at Lows

The Recorder
October 12, 2006

CNET showed three executives the door yesterday — including general counsel Sharon Le Duy — for their roles in stock option backdating. Le Duy herself got options on favorable dates, according to SEC documents.

Apple Presents Findings to Feds

The Recorder
October 5, 2006

Apple Computer’s lawyers met with federal prosecutors about stock option backdating, one day before the company announced it had “serious concerns” about the actions of two former officers.

Sonsini Got Questionable Options

The Recorder
October 2, 2006

Larry Sonsini, chairman of Wilson Sonsini Goodrich & Rosati, has already come under fire in the backdating mess for employee stock options he approved as a board member at multiple companies. But what about the options he OK’d for himself?

HP Merger May Kill Mercury Suit

The Recorder
September 7, 2006

The highest-profile case in the stock-option backdating morass may go poof just as two of California’s most intimidating firms square off. Part of the problem: Larry Sonsini seems to be on both sides of the case, now.

Another Sonsini Company Launches Options Probe

Legal Pad
September 6, 2006

Software maker Novell Inc. is the one of the latest companies to have its lawyers looking for red flags over stock option grants. That’s one more company that may find itself in the crosshairs of the options mess, and one more that can boast it once had Larry Sonsini on its board.

Lawyers/Directors Didn’t Stop Shady Options

The Recorder
August 23, 2006

At five companies previously unmentioned in the stock option backdating scandal, star Silicon Valley corporate governance lawyers failed to prevent shady executive stock option grants.

Sonsini Boards Gave Lots of Hot Dates

The Recorder
August 23, 2006

Wilson Sonsini partner Larry Sonsini was a much sought-after board member in the late 1990s. But several of the corporations that landed him — including three that have not been previously reported — exhibit suspicious option grant dates.

Comverse Is Likely Next Options Target

The Recorder
August 2, 2006

Rambus Inc. removed its general counsel, John Danforth, naming him a senior legal adviser. The move comes amid court setbacks in San Jose and a hovering options backdating cloud.

Help Now, Get Sued Later

The Recorder
July 24, 2006

Corporations with options backdating problems are in an awkward position vis a vis their auditors: How can a company sue an accounting firm that might control just how quickly that company can restate its earnings?

In Backdating, Sonsini Firm Center Stage

The Recorder
July 19, 2006

Wilson Sonsini has long been the dominant legal player in Silicon Valley. Now, as dozens of tech companies become ensnared in backdating probes, defense lawyers and academics wonder how the firm’s clients will handle the fallout.

Mercury Won’t Fight Lerach On Backdating

The Recorder
July 18, 2006

Plaintiff lawyer William Lerach won’t have to worry about Mercury Interactive pursuing its own civil backdating claim against its former executives, according to an internal report.

White-Collar Prosecutions Losing Steam

Legal Times
July 17, 2006

Despite the Justice Department’s reassurances that cracking down on corporate crime is a top priority, recent statistics show that prosecutions have stalled.

Brocade Stock Indictment Now Imminent

The Recorder
July 14, 2006

A lawyer for former Brocade CEO Gregory Reyes was in San Francisco last week pleading with federal prosecutors not to indict his client in connection with stock backdating allegations.

General Counsel Taking Stock

Corporate Counsel
July 14, 2006

Compensation for GCs is on the rise, with companies relying more on restricted stock grants to reward valued players. But the reasons behind this growing trend may not be what you think.

Where’s SEC in Ryan’s Backdating Team?

Legal Pad
July 14, 2006

One quick question for Kevin Ryan’s new stock options task force: Where’s the SEC?

Class Rules Not So Bad After All

The Recorder
July 3, 2006

Given the climate surrounding stock option backdating, Orrick, Herrington partner James Kramer understands the influx of derivative claims. But they’re making plaintiff firms advocate for the same class action reform they once hated.

Next Round of Backdating Suits on Way

The National Law Journal
June 9, 2006

Dozens of shareholder suits have been filed, claiming that companies backdated options allowing executives to enhance profits when they exercised their options.

Stock Option Scandal: Fun for Everyone!

Legal Pad
June 5, 2006

The backdating of stock options has got lawyers pretty much all up and down the state on the phone. Just wait ’til the indictments start …

McAfee GC Fired Over Stock Options

The Recorder
May 31, 2006

A second local GC is ousted as backdating probes continue to multiply.

A Question of Timing

The National Law Journal
February 22, 2006

The SEC is paying closer attention to corporate backdating of option grants and whether it is being used to gain favorable stock prices. Here are ways for companies to prevent such manipulation.

Can You Spot the Financial Distortion?

The National Law Journal
February 8, 2006

Any general counsel who wants to maintain a strong corporate governance function has to understand the revenue distortions that some clever executives have used to inflate reported earnings.