On the heels of a conviction against former Brocade Communications CEO Gregory Reyes, the Securities and Exchange Commission has filed fraud charges against Michael Byrd, the company's former CFO and COO.
The commission alleges that he disregarded indications that other senior corporate executives at the networking company were backdating stock option grants. The SEC alleges that Byrd learned of instances when Reyes and other executives were backdating options, but didn't try to properly account for the expenses or disclose them to investors.
The SEC's complaint describes occasions when the company granted options to executives on dates before they were even hired. Byrd interviewed some of these executives, and the SEC alleges that he knew the option paperwork had been falsified.
The SEC also charged that Byrd himself received a backdated option grant after he became COO in 2001 but claimed the options had been granted on an earlier date.
Byrd's former boss, Reyes, was found guilty of securities fraud earlier this month (see Ex-Brocade CEO Convicted). He has vowed to appeal and maintains his innocence.
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