Oral Arguments in the Greg Reyes Case
May 11, 2011 -- Yesterday, May 10, the backdated options witch-hunt began drawing to its close. A three-judge panel from the Ninth Circuit Court of Appeals heard oral arguments in the case of Greg Reyes, the former CEO of Brocade, who was convicted of committing securities fraud by backdating options at his company. Coincidentally, Reyes was the first person to be indicted in connection with backdated options, back in 2006. Now his case bodes to be the last resolved, even as he languishes in prison. Unfortunately, the appellate court was not able to consider the most general policy questions in the Reyes case: How did the SEC come to institute an absurd rule of accounting for backdated options? Who made the decision to criminalize violations of that absurdity? And why were only a few people targeted for criminal prosecution in the matter? The legal questions that the appeals court was asked to consider included: Was there a substantive misstatement of the law in Reyes’s trial? Was there prosecutorial misconduct? Was the conviction beyond the pale, given the evidence?

May 11, 2011
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