Risk Management

No New Trial for Reyes Despite Witness Recant

The witness: Brocade's ex-CEO didn't keep option backdating a secret after all. The judge: So what?
Stephen TaubJanuary 10, 2008

The first executive to be convicted in a trial over the backdating of stock options will not get a new day in court.

U.S. District Court Judge Charles Breyer denied a motion for a new trial by former Brocade Communications Systems CEO Gregory Reyes, even though a key prosecution witness supposedly recanted parts of her testimony, the Associated Press reported.

Reyes was convicted in August on 10 counts of securities fraud.

In making his ruling, Breyer said the witness’ new statements would not likely have changed the outcome of the trial, according to the AP.

Elizabeth Moore, Brocade’s former stock administrator, testified at Reyes’ trial that the company’s finance department was kept in the dark about stock-option-granting practices. Prosecutors pointed to her testimony to drive home their case that Reyes knew what he was doing was wrong and tried to prevent others from finding out, according to the AP report.

However, Reyes’ lawyers claim Moore now says she lied on the stand because she felt bullied by prosecutors and was afraid she might lose her job, the AP wrote.

In fact, she now insists Brocade’s finance department was aware of the backdating, according to the wire service, citing declarations filed by friends and colleagues of Moore.

But Judge Breyer reportedly said, “It’s not new. What’s new is she feels badly for testifying in a certain way. That’s not new evidence.”

Reyes is scheduled to be sentenced on Jan. 16. He faces 15 to 21 months in prison.