On July 19, 2007, Judge Breyer deferred, for the second time, his decision on the pending motion to dismiss in the Brocade stock options backdating trial. As discussed in prior posts, see below, the government's first criminal trial of stock-options backdating conduct began last month against ex-Brocade CEO Greg Reyes. At the close of the prosecution's case, the defendant moved to dismiss. While Judge Breyer gave signals that he might grant Reyes' motion based on the prosecution's limited evidence of Reyes' intent, he initially deferred his decision until July 19, 2007. As we predicted in prior posts, on July 19, 2007, Judge Breyer again deferred his decision, this time indefinitely.
Judge Breyer also ruled on July 19 on two motions concerning what evidence the defense would be permitted to present in the coming days: (1) testimony will be allowed by witnesses from major U.S. brokerage houses that Brocade's earnings restatements, made as a result of backdating issues, were irrelevant to investment decisions (deemed relevant); and (2) evidence will not be permitted showing that Reyes' fired an employee from Brocade several years ago for stealing from the company (deemed irrelevant).
For more information on the Brocade trial, please refer to our prior posts on this subject:
The Brocade Trial: Reyes Defense Goes On The Offensive -- "Stock Options Costs Are Irrelevant To Investment Decisions"
The Brocade Trial: Judge Breyer Postpones Decision on Motion to Dismiss and Orders The Defense To Proceed
The Brocade Trial: Judge Breyer May Take Case Away From Jury
The Brocade Trial: The Prosecution Rests
The Brocade Trial: An Important Defense Gets in the Door
The Brocade Trial: The First Two Weeks
The Brocade Criminal Trial: Former Employee Testimony Damaging to Reyes