News Release

Conviction of Former CEO of Brocade Communications Inc. Should Be Vacated

National Criminal Defense Bar Assn. Files Amicus Brief in Appeal of First Stock Options Backdating Conviction

Washington, DC­ (September 12, 2008) -- Today, the National Association of Criminal Defense Lawyers (NACDL) filed an amicus, or friend-of-the-court, brief with the U.S. Court of Appeals for the Ninth Circuit in the matter of U.S. v. Gregory L. Reyes, No. 0-10047. The brief was prepared pro bono by the law firm of Mayer Brown LLP and seeks to have the conviction of Gregory Reyes, the former CEO of Brocade Communications Inc., vacated and remanded to the trial court with instructions to acquit or, in the alternative, to conduct a new trial.

The brief can be downloaded from NACDL's Amicus Curiae web page or by following the below link:$FILE/Reyes_Amicus.pdf

Convicted in the U.S. District Court for the Northern District of California, Reyes is the very first criminal conviction for alleged backdating of employee stock options. The specific alleged facts are that Reyes signed options grants to other people – and not to himself – that were improperly dated. The government’s proof of fraud rested on the notion that Reyes deceived his own finance department about the option grants, but supplied only one low-level witness from the finance department who testified that she was unaware that the option grants had been backdated. When she recanted her testimony after trial, the government convinced the district court to nonetheless let Reyes’ conviction stand.

This does not meet the standard of criminal intent required by the use of the word “willfully” in criminal securities fraud laws. There was simply no proof that Reyes was aware that the accounting treatment of Brocade’s routine options grants would have any effect on investors – which has to be proven even in civil securities fraud cases. To make matters worse, the prosecutor told jurors that Reyes’ defense counsel was merely a conduit to “carry out the lie” that Reyes initiated. Ad hominem attacks on defendants and their counsel should be, and are, prohibited.

“This is yet another sad example of prosecutorial overreaching and misconduct set in a general context of overcriminalization in the American system, particularly in the white collar arena,” according to Stephanie A. Martz, Senior Director of NACDL’s White Collar Crime Project. “It’s breathtaking that prosecutors even proceeded with this case given substantial evidence undermining any claim that Reyes possessed the requisite intent, criminal or civil for that matter, to be charged in a case where the very ‘materiality to investors’ requirement necessary to find just civil liability appears absent.”

A second amicus brief is being filed by former United States Attorneys and Justice Department officials in support of Reyes. The brief was prepared by Michael Horowitz of Cadwalader, Wickersham, and Taft LLP.

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The National Association of Criminal Defense Lawyers is the preeminent organization advancing the mission of the criminal defense bar to ensure justice and due process for persons accused of crime or wrongdoing. A professional bar association founded in 1958, NACDL's many thousands of direct members in 28 countries – and 90 state, provincial and local affiliate organizations totaling up to 40,000 attorneys – include private criminal defense lawyers, public defenders, military defense counsel, law professors and judges committed to preserving fairness and promoting a rational and humane criminal legal system.