Sec settles mercury backdating brocade
was indicted on charges stemming from the company’s stock-option backdating scheme. Abrams was charged with one count of income tax evasion and two counts of aiding and assisting in the preparation of false tax returns for two other Mercury executives, according to U. According to the indictment, Abrams orchestrated the backdating of stock-option exercise dates for herself, then-Mercury CEO Amnon Landan, and then-COO Kenneth Klein, reducing the income taxes due on the gains realized by the exercises in April, May, and August 2001.
Elizabeth Moore, a key witness to Reyes's conviction and the only employee of Brocade’s finance department to be called during the proceedings, testified that neither she nor any other members of the finance department had any knowledge of backdating or fraudulent occurrences within the organization.Under his leadership, the company went public in May 1999, growing from a small startup business into one of the largest and most successful technology companies in the Silicon Valley - a leadership position that it maintains to this day.Brocade showed 7 quarters of profitability and revenue growth during that time – in the first two years alone, revenue growth exceeded 150% altogether.An attorney for Abrams, who hadn’t any comment for the article yesterday, didn’t immediately return a call from today. Thus, if a person exercises non-qualified stock options, purchasing stock at a lower price than fair market value on that date, the difference between the purchase price and fair market value is taxed as ordinary income.Although federal law typically doesn’t require payment of ordinary income tax upon the exercise of incentive stock options, the difference between fair market value and the exercise price is included in alternative minimum tax income, which may trigger the imposition of the alternative minimum tax.Gregory Reyes (born September 1, 1962) is an American businessman who most recently served as the Chief Executive Officer (CEO) for Brocade Communications.
He is the first person to have been convicted for fraudulent backdating of corporate stock options.
As CEO of Brocade Communications, Reyes sold SAN (Storage Area Network) infrastructure to a number of companies, including IBM, EMC Corp., Compaq, Dell, NEC, and HP.
During Reyes's time as CEO, Brocade was the largest manufacturer of networking equipment that provides data storage in the world.
Resigned, May 1, 2006; Pleaded guilty to federal charges on Nov.
In May 2007, was sentenced to one year and one day in prison, the first corporate executive to be sentenced for an options-related crime.
Separately, the Securities and Exchange Commission filed civil fraud charges against Therrien, alleging that he received millions of dollars in undisclosed compensation by fraudulently backdating the exercise of an option to purchase company stock.