May 31, 2007
SEC and Brocade Communications Settle Back Dating Charges
As earlier reported, in a much-anticipated settlement to show the agency's current thinking on corporate penalties, the Securities and Exchange Commission announced today the formal settlement of stock options backdating charges against Brocade Communications Systems, Inc., with a civil penalty of $7 million. The Commission's complaint alleges that Brocade's former CEO, President and Chairman, Gregory L. Reyes, routinely provided extra compensation to employees by granting valuable in-the-money stock options for which a financial statement expense was required. In order to avoid reporting to investors the hundreds of millions of dollars in undisclosed compensation expenses, Brocade's former executives allegedly concealed the fact that the options had been granted in-the-money by creating records making it falsely appear that the options had been granted at a lower price on an earlier date.
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