The Ninth Circuit has thrown out Gregory Reyes' conviction for stock option backdating while he was CEO at Brocade Commuunications Inc. The court ruled that the U.S. attorney's office committed prosecutorial misconduct by saying during closing argument that the entire Brocade finance department was ignorant of the fraud. Assistant U.S. Attorneys Adam Reeves and Timothy Crudo shared closing arguments in the case.
"In representing the United States, a federal prosecutor has a special duty not to impede the truth," wrote Judge Mary Schroeder [pdf]. Judges Stephen Reinhardt and Louis Pollak, sitting by designation, concurred.
The court also upheld the conviction of Brocade HR director Stephanie Jensen, but remanded for resentencing, saying U.S. District Judge Charles Breyer should not have increased her sentence due to obstruction of justice by her attorney.
The decision is a huge blow to the Northern District U.S. attorney's office, as Reyes and Jensen were the only executives convicted at trial for stock option backdating .
Updated: We have a fuller, Recorder story at CalLaw.com now.
— Recorder staff