Five of those received prison sentences, as opposed to probation or fines.
That includes Jensen, the former human resources chief at Brocade and the only Silicon Valley executive convicted to date. ’ That is often very difficult to prove,” said Peter Henning, a Wayne State University law professor and former federal prosecutor who has followed the backdating scandals closely.
#4735 Upgrade was calling outdated in a way that would not filter packages that did not need an upgrade.
The led to potential backdate of package if a beta version was in use. #4735 that would ignore filtering out packages that actually needed an upgrade, and just return them all when not upgrading a specific package.
Reyes’ attorneys, for example, have argued he never profited personally from backdating and that he relied on accounting advice from senior executives and company auditors. “In a criminal case, you have to prove wrongdoing beyond a reasonable doubt, and in many of these situations you would have trouble demonstrating that a CEO knew he was in engaged in a criminal violation.” That doesn’t mean no harm was done, argues Harvard law professor Jesse Fried, another expert on corporate governance.
A jury found Reyes guilty on 10 counts of securities fraud, but an appellate court ruled the trial was tainted by a prosecutor’s improper statements in court. He said the practice artificially inflated company earnings and stock values, in many cases “enabling executives to reap larger cash bonuses and sell their stock at a higher price.” The government’s investigations, as well as changes in accounting rules, have made companies more sensitive to legal requirements around backdating, added Grundfest.
Another headline-grabbing case collapsed last month, when a different judge dismissed charges against two executives of Southern California chip-maker Broadcom, while overturning a guilty plea by a third executive and excoriating prosecutors for misconduct.
These led to numerous civil and criminal enforcement actions that helped change those practices, they say, despite some high-profile stumbles by prosecutors in recent months.
At its height, the backdating scandal touched dozens of local companies that came under federal investigation or launched their own accounting reviews, which led in some cases to firings, earnings restatements and shareholder lawsuits.
All told, however, federal prosecutors around the country charged at least 22 corporate executives with criminal violations related to backdating over the last five years.
While a few cases are still pending, court records and news reports show at least 13 executives were convicted.