“There certainly were companies that were unnecessarily tortured because of backdating violations.
But there were other companies at which the violations were serious and had to be addressed.” Brandon Bailey can be reached at 408-920-5022.
Hoping to spare her client from prison, an attorney for former Brocade executive Stephanie Jensen stood before a federal judge this month and argued that the furor over stock-option backdating was a “so-called scandal” that never amounted to much.
“Some would say it fizzled,” added defense attorney Jan Nielsen Little, who argued that a wave of investigations that shook the tech industry had turned up little evidence of wrongdoing in connection with a practice that was “widespread, albeit misunderstood.” But as authorities gear up for a retrial next month of Jensen’s former boss, ex-Brocade CEO Greg Reyes, federal officials and legal experts say the investigations found widespread accounting abuses at a host of companies.
In one prominent example, a federal appellate court overturned Reyes’ conviction on backdating-related charges last summer.
Another headline-grabbing case collapsed last month, when a different judge dismissed charges against two executives of Southern California chip-maker Broadcom, while overturning a guilty plea by a third executive and excoriating prosecutors for misconduct.
Nationwide, however, authorities have won at least 13 criminal convictions for backdating-related offenses, while the Securities and Exchange Commission says it brought 94 civil actions against companies and individual executives.
And 23 companies have paid out nearly billion to settle class-action lawsuits by investors alleging that companies had failed to disclose backdating and its effect on earnings, according to Risk Metrics, a financial research and risk management firm.All told, however, federal prosecutors around the country charged at least 22 corporate executives with criminal violations related to backdating over the last five years.