On SquawkBlog, Charlie Gasparino expands on his reporting on the possibility that former Brocade CEO Greg Reyes will find himself the defendant in the first options backdating case brought by the US government.
The big question is whether Reyes, who resigned from Brocade more than a year ago, will be charged criminally by the US Attorney's office. Lawyers and representatives for Reyes say that last week they made a last-ditch attempt to get prosecutors to back off during a lengthy power-point presentation made to the US Attorney in San Francisco. According to people with direct knowledge of the presentation, Reyes' lawyers argued that he had little accounting knowledge - he was predominantly a salesman, and even though he had control over the granting of options, Reyes wasn’t conscious of the fact that he was doing something potentially illegal. Further, his attorneys claimed that Reyes relied on the accounting expertise of the company’s CFO and audit committee to serve as a check in his options granting practices.