Option Granting Practices and exploits Message Board

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Strategies & Market Trends : Option Granting Practices and exploits

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Oct 28 3:59 PM EDT

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From: Lizzie Tudor	9/18/2007 12:29:18 AM
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Hi I didn't know you set up this thread! My whole office is consumed/distressed about the Reyes conviction, because the feeling is he had no criminal intent, since nobody knew they had to expense in the money options in 2000-2002. Anyway they unearthed all these legal briefs which basically expose the justice dept of some really nasty prosecutorial misconduct! I think so anyway. Wish I was a lawyer and knew if this was standard practice. Basically the government lied in their closing arguments that Reyes "hid" the backdating practice from the CFO and finance. there were some testimonies taken from the CFO (Byrd) and Controller (Bossi) at the time of the original indictment that clearly showed the CFO knew and probably instrumented the process. All these docs are online and you can read about the trial. fortunelegalpad.files.wordpress.com ??Byrd told him that regardless of when he started, Byrd could issue him stock options as soon as BOSSI signed his letter. BOSSI asked Byrd if such a grant would generate a compensation charge for the company, and if that was acceptable to him. Byrd replied that once BOSSI signed the letter, Brocade was getting ??value?? from him and could issue the options with no compensation charge. Byrd also indicated he had done the same thing at his previous company.?? (11/29/05 Bossi 302, at 2.) Another thing that happened in the case is this one backdated stock option grant for some employee Geruson kept getting mentioned by the prosecution. But the DOJ dropped the mail fraud charge that they originally filed against Reyes, because the DOJs own investigation revealed the Geruson grant was entirely orchestrated by the CFO. So another lie in the trial from the government- AMAZING! As Brocade??s CFO, Byrd was the central player in Brocade??s stock option program. He designed the Offer Acceptance and Part Time Programs that caused the restatement. And in his sole immunized interview with the prosecution, Byrd unequivocally acknowledged that he personally had decided to award Geruson stock options with a look-back price and personally had made the accounting decision regarding the grant. The Geruson grant has been at center stage from the inception of this case. Count Three of the Indictment charged Mr. Reyes with mail fraud in connection with the offer letter mailed to Geruson, although on the eve of trial the prosecution moved to dismiss that count. The prosecution was aware that Byrd by then had reached a settlement in principle with the SEC based on, among other things, his look-back award to Geruson, which the SEC staff had previously referenced in an email that the prosecution had produced to defense counsel during discovery.

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