Securities Law

Judge Considers Backdating Motion

The trial of the ex-CEO of Brocade Communications is continuing as the judge overseeing the proceedings considers a defense motion to dismiss the charges.

Lawyers for Gregory Reyes contend the charges should be dismissed because he lacked criminal intent when he backdated stock options. They say Reyes wanted to retain and recruit good employees rather than defraud shareholders, who don’t consider backdating material.

In papers filed on Monday, prosecutors recounted evidence intended to show that Reyes knew backdating was wrong, the Wall Street Journal (sub. req.) reports. He called the practice “illegal” in an e-mail, prosecutors said, and changed meeting minutes to cover up his actions.

U.S. District Judge Charles Breyer of San Francisco ordered the briefs on Friday. (For more information see this post.)

So far, 10 executives at six companies have been accused of backdating-related criminal charges, and five have pleaded guilty, the newspaper says. Reyes is the first to go on trial.

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