Fortune’s Roger Parloff reported Friday at his Legal Pad blog on a significant recent development in the options backdating case of former Brocade CEO Gregory Reyes. Although he was convicted on 10 bacdating related charges, Reyes will likely receive a minimal prison term – if he in fact is sentenced to any prison time at all. Seems the judge presiding over Reyes’ trial has concluded that Reyes’ conduct caused no economic losses, notwithstanding the Government’s assertions that Reyes caused as much as $2.5 to 3 billion. The Court rejected the Government’s various loss calculations as unproven or having no basis in fact or law. Thank Heaven we have the feds to protect us from all those non-loss causers.

By now you have likely heard that former Brocade CEO Greg Reyes was convicted today on all counts in the Government’s misguided options backdating related prosecution. Larry Ribstein of Ideoblog has this excellent post in which he critically assesses the weak premise that undegirds the Government’s pursuit of these cases. Ribstein raises the possibility that the Government may now be emboldened to pursue further cases, possibly against such high profile executives as Apple CEO Steve Jobs. There are reasons to believe that the Government may not take such steps, not the least of which is the live possibility that some or all of the Reyes verdict may very well not withstand post-trial motions, let alone appeal. It is certain, however, that the continuing criminalization of poor business judgment is a very troublling trend indeed.

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.

Law.com published a story today about the continuing options backdating morass in which iconic Silicon Valley law firm Wilson Sonsini continues to find itself. This whole mess seems like a bad cold that those caught in it just can’t seem to shake.

Yet more backdating news. Attorneys for two former Brocade executives indicted on backdating related fraud charges argued in federal district court that many of the charges against them should be dismissed, The Recorder reports. The Defendants’ motion was primarily predicated on a recent decision by the 5th Circuit Court of Appeals in an Enron related case, holding that a person cannot be convicted on the theory that they deprived their employer of their honest services if they were acting in the company’s best interests. The judge presiding over the case reportedly appeared inclined to deny the motion to dismiss the charges and to allow the prosecution to proceed, at least for now.

Chancellor William Chandler, in a very pointed opinion, denied Maxim Integrated Products’ motion to dismiss most of the backdating related claims brought against it by shareholder William Ryan (you can access a copy of Chancellor Chandler’s opinion here.) Noting that a majority of the board of directors approved each of the backdated options grants in question, Chancellor Chandler dismissed Maxim’s argument that Ryan’s derivatove suit should be dismissed because he did not ask the board to take action before he brought the suit – typically a requirement for such claims. Given the significant influence that the Delaware Chancery Court carries in the corporate law world, and the esteem in which Chancellor Chandler is especially held, this ruling is very significant, and may very well pave the way for a substantial number of future backdating related cases.

Professor Larry Ribstein has a very insightful post on the Apple options issue on his blog Ideoblog. Professor Ribstein raises the very interesting question of whether the Apple story would be bigger news, and whether business journalists and corporate “watchdogs” wouldn’t be more exercised over the story if we were talking about Jeff Skilling and Enron, or Bernie Ebbers and Worldcom, instead of Steve Jobs. Hey, Al Gore signed off on the Apple internal investigation, so all is above board, right? As I mentioned in an earlier post, and as Professor Ribstein states, the facts as they have been reported raise the serious question of whether Steve Jobs participated in acts of fraud. Al Gore signed off on a report that exonerated Jobs. Skilling and Ebbers are doing 25 years. Hypocrisy? You be the judge.

Source: Ideoblog

After reading today’s New York Times article on Apple’s latest pronouncement related to its internal proble of its options dating issues, one would conclude either that the company is trying to put the best face on a very bad situation or is simply sticking its head in the sand. Simply stating that the CEO knew about the backdating but did not personally profit begs the question of whether the company itself might face any liability, and wholly avoids the question of whether recently disclosed irregularities surrounding an options grant to Jobs himself might ultimately lead to an liability for the company or for Jobs himself. As I said yesterday, this situation will get a whole lot worse before it gets any better, unless Apple steps up and is far more forthcoming.

The Financial Times today published a report that in 2001 Apple CEO Steve Jobs received $7.5 million in stock options without the required board of directors authorization, and that corporate records were later falsified to show that the full board had in fact approved the options grant, as Apple’s internal procedures require. A published this afternoon suggested that there is very little lkkelihood that this issue will lead to Jobs getting dumped at Apple, and I expect that that is correct. It is likely, however, that things will get worse for both Apple and Jobs before they get better on this issue. The FT story revealed that the SEC is continuing to look into the options issues qat Apple. Stay tuned on this one.

UPDATE: The Wall Street Journal’s Law Blog reported earlier today that Jobs has hired Mark Pomerantz of the Paul Weiss firm to represent him in the options probe. Pomerantz most notably hired investment banker Frank Quattrone. Certainly a sign of how possibly serious this issue is.