Brocade communications options backdating Punjabi portal video sex
To avoid having to pay higher taxes, many companies adopted a policy of issuing “at the money” stock options in lieu of additional income, with the idea that the executive or employee would benefit through the option by working to increase the value of the company without exceeding the one million dollar deductibility cap for executive income.
When company executives discovered that they had the ability to backdate stock option grants, thus making them both tax deductible and “in the money” on the date of actual issuance, the common practice of stock option backdating for financial gain began on a widespread level.
Among other things, Reyes’ attorneys insist prosecutors misled the jury by suggesting Reyes kept Brocade’s finance executives in the dark about the options, when in fact investigators had been repeatedly told by those executives they were aware of backdating.
Options backdating is the practice of altering the date a stock option was granted, to a usually earlier (but sometimes later) date at which the underlying stock price was lower.
This is a way of repricing options to make them valuable or more valuable when the option "strike price" (the fixed price at which the owner of the option can purchase stock) is fixed to the stock price at the date the option was granted.
** OMITS REFERENCE TO STEPHANIE JENSEN, WHO HAS NOT BEEN CRIMINALLY CHARGED ** Brocade's former CEO Gregory L. jury convicted the former chief executive of Brocade Communications Systemson all 10 counts Tuesday in the government's first criminal options-backdating trial.
Reyes walks into a federal courthouse in San Francisco, Wednesday, Aug. Reyes became the first chief executive to be criminally charged over alleged improper accounting of stock options. The jury returned the verdict in the trial of Gregory Reyes after seven days of deliberations. Reyes, 44, was found guilty of 10 counts including conspiracy to commit securities fraud; mail fraud; falsifying books, records and accounts, and making false statements.
The Brocade cases offer the nation’s largest federal appeals court an unprecedented opportunity to explore whether the type of executive misconduct linked to the backdating scandal warranted rarely used criminal sanctions, and whether the Reyes and Jensen prosecutions were a proper use of federal criminal securities laws.