| SAN FRANCISCO
SAN FRANCISCO Dec 19 Brocade Communications
Systems Inc's (BRCD.O) former personnel director did not
conspire to backdate employee stock-option awards, the
company's former CEO said in a court document unsealed on
Wednesday that goes against a jury's findings in the case.
Stephanie Jensen, Brocade's former vice president of human
resources, "never participated in a scheme to defraud Brocade,
its board, its shareholders, its auditors, the public" or the
U.S. Securities and Exchange Commission, former Brocade Chief
Executive Gregory Reyes said in a sworn statement in March.
The statement and other materials unsealed by a U.S.
federal judge are the first time the public has heard directly
from Reyes about the backdating allegations, albeit in court
records dating back nine months.
At trial, Reyes' lawyer argued that while Reyes backdated
options awards, he did not know the practice was illegal and
was unaware of the accounting and legal consequences of doing
so. While not illegal, backdating of options awards must be
disclosed and accounted for under U.S. accounting rules.
A jury convicted Reyes in August of 10 criminal counts,
making him the first executive to be found guilty at trial of
charges stemming from a scandal in which more than 200 U.S.
companies allegedly used hindsight to date options grants on
days when underlying stock prices were low, thereby locking in
Reyes, who was CEO of the San Jose, California-based
data-storage network switch maker from 1998 to 2005, did not
testify at his own criminal trial or at Jensen's trial, which
ended with a jury finding her guilty on Dec. 5 of conspiracy
and falsifying records.
Judge Charles Breyer of U.S. District Court in San
Francisco unsealed Reyes' pretrial statements after prosecutors
said they needed them to prepare for Reyes' sentencing, which
was postponed from Wednesday to an undetermined date. Reyes
made the statements in support of Jensen's request to be tried
separately from him.
"Ms. Jensen did not have the authority to choose the date
or stock price of options," Reyes said in the March statement.
"Only I had that authority, and only I knew when I made my
"I told Ms. Jensen that the option grant dates were the
dates that I made the granting decisions. Options were priced
at the fair market value on the grant dates," he said.
Jensen's lawyers said in another document unsealed on
Wednesday that Reyes' statements that only he knew when he made
the option granting decisions "are critical to Ms. Jensen's
defense. They are specific, clear, unequivocal, uniquely known
by Mr. Reyes, and highly exculpatory to Ms. Jensen."
Jensen's attorney Jan Nielsen Little told jurors at trial
that Jensen was unaware of the accounting and legal
consequences of backdating and had inherited a compensation
system devised by the company's former chief financial
Jensen faces up to 20 years in prison at her sentencing,
scheduled for March 12.
(Reporting by Philipp Gollner, editing by Gerald E.