3:45 PM -- Greg Reyes, Stephanie Jensen, and Tony Canova will get their chance in criminal or civil court to prove their innocence in the options backdating scandal. (See Reyes Charged With Fraud.) Meanwhile, their old company must make its case in the court of public opinion.
Brocade is trying its best to distance itself from its former CEO and other executives accused by the Justice Department and SEC of fraudulent practices. A statement released by the company Thursday pointed out that no current Brocade employees were named. Further, the statement says the firm has cleaned up its books by restating earnings and is willing to pay at least $7 million to settle with the SEC.
According to the statement: "Brocade has taken a number of steps to strengthen disclosure controls and procedures, and internal control over financial reporting, including personnel and executive changes and procedural changes to improve the stock option granting and employee change in status processes."
Former human resources VP Jensen left Brocade in 2004. Reyes was sent packing as CEO in January of 2005 and then dumped as a consultant four months later. Canova stepped down as CFO in December. See Brocade Switches CEOs, Restates , and Brocade CFO Resigns.)
"Its all in the past," says one Wall Street analyst who gives Brocade the benefit of the doubt. "Reyes was an arrogant sales guy and was hated by Wall Street. But those who were involved are gone now. They have cleaned their books, restated earnings, and are close to an SEC settlement. As far as we know, the current management team is clean."