Wednesday, December 5, 2007
The second defendant from Brocade Communications was found guilty by a jury in San Francisco on charges related to options backdating at the company. Stephanie Jensen, the former human resources manager for the company, was convicted on one count of conspiracy and one count of filing false records with the SEC. Jensen was charged with former Brocade CEO Gregory Reyes in 2006, and initially there were eight charges against her. After the district court granted a severance motion, the government dismissed six counts, presenting a simpler case that focused on her work with Reyes to backdate options grants to a number of new hires at Brocade and the resulting false statements to the SEC because the backdated options were not properly accounted for in the financial statements. According to an AP story (here), Jensen's primary defense was her lack of knowledge about the accounting for stock options.
Similar to the Reyes conviction, the government's case did not include evidence that Jensen benefited personally from the backdating, which is often a key component in such prosecutions. The government relied in large part on the testimony of co-workers who raised questions about the backdating practices and Jensen's reassurances about who would be held responsible.
For a white collar crime case, this one was over almost before it began, with the trial lasting just a bit over one week. The district court postponed the sentencing of Reyes until after Jensen's trial, so that should take place in the near future. (ph)