Saturday, August 18, 2007

The SEC Focuses on Brocade

Although some had questioned -- especially prior to the conviction of CEO Gregory Reyes -- whether the Brocade backdating case was truly 'serious', it is clear that the Securities and Exchange Commission considers it to be so.

News reports indicate that the SEC has sued former Brocade CFO Michael Byrd, for, among other alleged violations, failing to re-state past filings once he learned of the backdating issue (it is unclear whether Byrd knew about the backdating at the time it occurred.)

The conviction of Reyes was groundbreaking; he was the first major figure convicted in the backdating scandals; the expansion of inquiry to those who -- in case of Byrd's alleged conduct -- failed to go back and 'correct the record' even though they had nothing to with the original violation should put a chill in the heart of any current corporate official who has suspicions of prior backdating at his/her company.

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