Former Brocade CEO sentenced to 18 months, fined $15M for illegal stock backdating

Ex-Brocade CEO sent to prison for stock backdating

SAN FRANCISCO — A federal judge has sentenced the former chief executive of Brocade Communications Inc. to 18 months in prison in a stock options backdating case.

Prosecutors say Gregory Reyes failed to disclose that the dates on stock options given to employees had been altered. He was convicted in March of nine counts of fraud and making false statements, but acquitted of conspiracy.

U.S. District Court Judge Charles Breyer also fined Reyes $15 million at Thursday’s sentencing. Reyes, whose lawyers are considering an appeal, is to report to prison Sept. 10.

Investors say the company’s failure to report the backdating scheme wiped out hundreds of millions of dollars in profits it reported for 1999-2004.

Brocade’s former human resources manager was convicted of similar charges.