Reyes’ fraud, conspiracy trial begins

Federal court trials have started for Gregory L. Reyes, former chief executive of Brocade Communications. Mr. Reyes, who was charged last July with securities fraud and conspiracy, is accused of backdating stock option grants, altering Brocade’s documents and causing the company to report false results, according to The New York Times. He is being tried in a San Francisco federal court, facing 10 counts of fraud, conspiracy, making false regulatory filings and falsifying the books. To secure a conviction for fraud, the prosecution must prove to the jury that Mr. Reyes knew the company should have expensed its options, and he falsified documents to cover-up backdating and to exaggerate financial figures, the Times said. If Mr. Reyes is convicted, federal prosecutors could identify other executives for indictments. More than 50 companies are undergoing investigation for their options practices, and eight executives have been indicted or submitted guilty please since a nationwide federal investigation began in 2005.