The Securities and Exchange Commission has hit an FD with a stock options backdating charge, claiming that he failed to red-flag instances at Brocade Communications Systems.
The US watchdog recently filed the claim against Michael J Byrd, stating that the former finance chief had not blown the whistle before he left the computer storage networking company in 2003.
The SEC said: 'The Securities and Exchange Commission filed fraud charges against Michael J Byrd, a former CFO and chief operating officer of Brocade Communications Systems Inc, alleging that he disregarded evidence of senior execs improperly backdating stock option grants at the company.'
The US markets monitor alleged that Byrd knew of cases in which Brocade’s then-CEO Gregory L Reyes and others were backdating options for certain individuals, but failed to make sure that the company properly accounted for the option expenses and disclosed them to investors.
He also signed-off on options grants given to some execs dated before they had joined the company, despite personally conducting their job interviews and therefore knowing exactly when the stock should have been awarded, the SEC said.
Marc Fagel, the SEC's associate regional director at its San Francisco office, said: 'Byrd was in a position to identify accounting irregularities and provide Brocade’s shareholders with honest, accurate information. Instead, we believe he turned a blind eye to misconduct by senior executives and signed off on fraudulent financial statements.'
Linda Chatman Thomsen, the SEC’s enforcement director added: 'This case confirms the commission’s commitment to pursuing not just those who perpetrate financial fraud, but the corporate gatekeepers who allow it to happen on their watch.'
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