{"id":1796,"date":"2009-08-19T07:58:22","date_gmt":"2009-08-19T15:58:22","guid":{"rendered":"http:\/\/hodakvalue.com\/blog\/?p=1796"},"modified":"2009-08-19T08:04:26","modified_gmt":"2009-08-19T16:04:26","slug":"reyes-backdating-conviction-overturned","status":"publish","type":"post","link":"http:\/\/hodakvalue.com\/blog\/reyes-backdating-conviction-overturned\/","title":{"rendered":"Reyes backdating conviction overturned; lying prosecutors called bad boys"},"content":{"rendered":"

Ex-Brocade CEO Greg Reyes was the example that prosecutors wanted to make out of a greedy CEO backdater<\/a>, i.e., someone who schemed to inflate his compensation in stock options.\u00a0 The prosecutors surveyed the field for the perfect poster child for their prosecutorial campaign, the perfect trophy for their case.\u00a0 They passed over Steve Jobs<\/a>, and settled on Greg Reyes.<\/p>\n

The first problem they had to overcome was that Reyes, unlike Jobs, didn’t agree to the backdating of his own options–only those of certain people who worked for him.\u00a0 Never mind that he didn’t personally benefit from the backdating; the prosecutors wanted their conviction.<\/p>\n

The next problem was that Reyes claimed he didn’t know that the disclosure he signed off on was improper.\u00a0 Backdating is, in fact, perfectly legal as long as it’s properly disclosed; then it’s just an in-the-money option, which is like an at-the-money option plus cash, both of which are commonplace (as were backdated options in Silicon Valley public companies of that time).\u00a0 But never mind that he didn’t know his firm’s disclosure was improper; the prosecutors wanted their conviction.<\/p>\n

The next problem was that the prosecutors knew<\/em> Reyes didn’t know the illegality of his actions<\/a>, and they held back that evidence from the jury.\u00a0 That’s what bugged out the eyes of Ninth Circuit when they overturned the conviction.<\/p>\n

The record demonstrates that the prosecution argued to the jury material facts that the prosecution knew were false, or at the very least had strong reason to doubt…<\/em><\/p>\n

Deliberate false statements by those privileged to represent the United States harm the trial process and the integrity of our prosecutorial system. We do not lightly tolerate a prosecutor asserting as a fact to the jury something known to be untrue or, at the very least, that the prosecution had very strong reason to doubt.<\/em><\/p><\/blockquote>\n

I’m grappling with what the Court meant by “not lightly tolerate.”\u00a0 If a CEO fails to disclose an otherwise legal award of options to his employees, we should not tolerate that by threatening his liberty and property to the tune of a 21-month jail sentence and $15 million fine.\u00a0 If a prosecutor lies to a jury in order to deprive a man of 21 months of his freedom and $15 million of his cash, we should not tolerate that by…telling him it was a bad thing to do?\u00a0 Help me out here.<\/p>\n

Larry Ribstein offer his usual, insightful coverage<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Ex-Brocade CEO Greg Reyes was the example that prosecutors wanted to make out of a greedy CEO backdater, i.e., someone who schemed to inflate his compensation in stock options.\u00a0 The prosecutors surveyed the field for the perfect poster child for their prosecutorial campaign, the perfect trophy for their case.\u00a0 They passed over Steve Jobs, and […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"class_list":["post-1796","post","type-post","status-publish","format-standard","hentry","category-scandal"],"_links":{"self":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/1796","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/comments?post=1796"}],"version-history":[{"count":7,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/1796\/revisions"}],"predecessor-version":[{"id":1800,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/posts\/1796\/revisions\/1800"}],"wp:attachment":[{"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/media?parent=1796"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/categories?post=1796"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/hodakvalue.com\/blog\/wp-json\/wp\/v2\/tags?post=1796"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}