Bad Day for Prosecutors in Brocade Backdating Case

Friday was a bad day for the federal prosecutors handling the options backdating related securities fraud case against former Brocade CEO Gregory Reyes, and tomorrow does not promise to be any better. The federal judge presiding over the case has ordered the prosecutors to file a response to the defense team’s motion for acquittal by 8 am tomorrow morning. At a hearing on Friday, the Judge grilled prosecutors relentlessly about what evidence had been presented to support the mens rea element of the securities fraud charges against Reyes, The Recorder reports. It would appear that the judge has serious doubts about whether the government has proven this critical element of its case.  The Recorder’s report would suggest that Mr. Reyes has a very strong chance of succeeding on his motion and completely blowing out the government’s case. How significant a blow to the Justice Department’s overall backdating prosecution efforts would remain to be seen, but this would not be a good first step for the prosecutors.

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