In fact, Cooke said, there are several reasons why the SEC would want to include older conduct in a case that includes more current charges relating to a different company.
For one, the longer list of alleged transgressions, the stronger the case, he said.
In handling big cases � as an example, Cooke pointed to former Paine Webber Vice President Enrique Perusquia, who pleaded guilty to defrauding investors in 2002 � Cooke said the commission likes to bolster its complaint with as many allegations as possible, even if some were too old to directly result in financial sanctions.
“We didn’t really care if it affected the bottom-line penalties,” he said, since even older allegations could help support the argument that a person was involved in a longstanding pattern of behavior.
Two people with knowledge of the SEC investigation said that combining the KLA and Juniper cases could allow the SEC to argue that Berry’s conduct across the two companies was a single pattern of behavior, and so her involvement in KLA could therefore fall within the statute.
SUSPICIOUS MINDS
Berry’s case also highlights the question of how executives should behave when confronted with an internal corporate investigation. Defense lawyers say the best way to avoid charges is to cooperate with such a probe. But that’s not always a feasible strategy.
Lawyers familiar with the internal investigations at both companies say Berry declined to answer questions by outside lawyers investigating the options problems.
| Optional Reading
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Read The Recorder‘s roundup of the stock-option backdating scandal. There won’t be a test later … but there might be a subpoena.