SEC files backdating charges against ex-Brocade FD
US watchdog alleges that Michael J Byrd turned a blind eye to evidence that company execs were backdating stock options
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.’
Further reading:
First guilty verdict in US options
backdating case