Where’s the crime?
Gregory Reyes, the ex-chairman of Brocade has been sentenced to 21 months in prison for stock backdating. It is surprising how many people here in the Valley see this as a “victimless crime.” He argued that he never personally benefited from the practice and 400 hundred letters sent to the court agreed with his personal acessment as a fine citizen. If you take look at this stock chart, I suspect there are some who beg to differ. This is just like the Martha Sewart case. — it’s about lying and obstruction of jusctice, which are in fact crimes.
Consider another high profile case that is still open. — Apple computer. You’d have a hard time finding anyone who could find a crime in what Steve Jobs is accused of (and that the company has essentially admitted to). Apple stock has been a rocket in the last couple of years, so in this case even stockholders have a hard time finding the crime. In this SEC report, you see that they have settled with various former officers at Apple. Since the Jobs options were repriced/reversed he seems to be out of the firing line. — again the argument of no personal benefit. But consider another little known fact. At the time Jobs rejoined Apple he brought two key employees with him from his former company (Next). Both of them received in the money options that someone dated and priced in a very advantageous manner. The two subsequently became head of Apple’s hardware and software operations. — and contributed in no small part to the reborn Apple. Of course they reaped millions on the options. The both “retired” in the spring of 2006 while the SEC investigation was starting. One of them sold some $30M of options in the days running up to his “retirement”. With a little digging you find that one was hired immediately at a $250k/year “consultant” to Apple with an employment contract that can be easily found on the Net, outlining the fact that no particular tasks would be expected of him. Fishy or not?