Stock Options Backdating: Recent Developments in Government Investigations
Recent developments in the Brocade, KLA-Tencor and Brooks Automation stock option backdating matters are of interest.
Read MoreTopic: D&O Liability
Further Analysis of the KPMG Dismissal
By Order dated July 16, 2007, Judge Kaplan confirmed his previous holding, in connection with KPMG tax shelter litigation, that the government’s interference with KPMG’s payment of the legal fees of its employees and former employees (under the now-superseded Thompson Memo) violated the employee’s constitutional rights.
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The Brocade Trial: Judge Breyer Postpones Decision On Motion To Dismiss
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.
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SEC On The Verge Of Making Announcements Regarding Stock Options Investigations
The Chairman of the United States Securities and Exchange Commission told reporters recently that the SEC is close to making announcements regarding ongoing stock options investigations. The Chairman said that the SEC believes it has “rounded up” most of the companies that improperly backdated options.
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U.S. Attorney To Appeal KPMG Dismissals
As anticipated, the U.S. Attorney for the Southern District of New York filed official notice on Monday, July 17 that it intends to appeal U.S. District Judge Lewis A. Kaplan’s recent dismissal of criminal tax fraud charges against 13 out of 16 former KPMG employees.
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Breaking News: Government’s Indictments Against 13 KPMG Partners Dismissed
Judge Lewis Kaplan of the S.D.N.Y. today granted 13 of 16 KPMG partners’ motions to dismiss the indictments brought against them by federal prosecutors concerning allegedly fraudulent tax shelters at KPMG.
Read MoreUpdate: Federal Prosecutors and Defense Counsel Estimate Criminal Defense Costs for KPMG Partners
As previously discussed here, on July 2, 2007, Judge Lewis Kaplan of the S.D.N.Y. requested, to assist in his decision on defendants’ motions to dismiss, that the federal prosecutors in the KPMG tax shelter case estimate the reasonable costs of a defense for the KPMG partners. The U.S. Attorney’s office recently responded.
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The Brocade Trial: Reyes Defense Goes On The Offensive — “Stock Options Costs Are Irrelevant To Investment Decisions”
With Judge Breyer having postponed ruling on his motion to dismiss until at least July 19, ex-Brocade CEO Greg Reyes’ defense has gone forward this week. Among the defense’s witnesses this week were two of Brocade’s founders, Seth Neiman and Paul Bonderson, and Jason Gold, formerly a fund manager at one of Brocade’s top investors.
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The Brocade Trial: Judge Breyer Postpones Decision on Motion to Dismiss and Orders The Defense To Proceed
The criminal prosecution of ex-Brocade CEO Greg Reyes over Brocade’s improper accounting for backdated stock options continues today.
Read MoreSupreme Court Requires Plaintiff to Meet Stringent Pleading Standard: Under PSLRA’s “Strong Inference” Requirement, Courts Must Consider Plausible Inferences Favoring Defendants
On June 21, 2007, in a much anticipated ruling affecting the ability of federal securities fraud complaints to withstand a motion to dismiss, the United States Supreme Court resolved a dispute between the federal circuit courts regarding what securities fraud plaintiffs must plead concerning the state of mind of the defendants in order for a complaint to withstand dismissal.
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