Fun and games at backdating trial

What a shame that the options backdating trial of Brocade ex-CEO Greg Reyes isn't getting more coverage up in SF because it's been a hoot and a howl. Reyes’s lawyers moved for a mistrial yet again yesterday, based on the conduct of U.S. District Judge Charles Breyer (something about him making facial expressions that show bias against Reyes). Breyer denied the motion and said he was having a tough time taking the motion seriously since it was the "third or fourth" time in five days that Reyes' attorneys were looking for a mistrial. In fairness to Skadden attorney Richard Marmaro, Breyer is no shrinking violet. As reported by the Daily Journal (no link), he took issue with the way a NASD investigator was being cross examined by a defense attorney - so much so that he blocked questions without any objection from prosecutors.

Of course, the prosecutors have had their own troubles - starting with June Weaver, the former Brocade Communications HR administrator who made news last week when she testified hearing Reyes say: "It's not illegal if you don't get caught." Pretty damning, eh? Too bad Weaver had no recollection of what Reyes was referring to when he said it. As reported by Legal Pad, it's not only what she said but how she said it:

For one thing, Weaver barely remembers anything at all about her time working for Brocade (though she does communicate that ignorance with a remarkable self-assurance). Weaver doesn’t remember how she felt about things, who she talked to, the nature of documents with her name on them, and whether she received certain e-mails and memos that were sent to her. Then there’s her apparent tic of asking people to rephrase questions: She does it with approximately 40 percent of questions, and that’s a lot given that she was on the stand for almost three days.

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Then there was her testimony this morning on redirect that she raised concerns about options improprieties to her boss, Stephanie Jensen (who was indicted along with Reyes, and is awaiting trial). That assertion contradicted Weaver's earlier testimony on cross examination that she never raised concerns, and she apparently did not tell the FBI about that conversation when agents interviewed her in 2005

Reyes is the biggest fish to go on trial in the government's ongoing options backdating inquiry, and it's being watched as a possible test case for other CEOs now being investigated (among them former KB CEO Bruce Karatz). The government argues that Reyes intentionally masterminded a stock-options backdating scheme designed to defraud investors; Reyes says he believed the practice was legal.