The New York Times reports today that former Brocade Communications Systems Chief Executive Gregory Reyes was convicted on ten counts of conspiracy and fraud in the first criminal trial connected to the option back-dating scandals. Here is the story: Ex-Brocade Chief Convicted in Backdating Case.
Reyes, who did not personally receive any tainted options, faces up to 20 years in prison. An interesting quote in the New York Times story comes from a human resources employee who testified at trial that Reyes told her the practice was “not illegal if you don’t get caught.” This quote seems to capture the mentality of many corporate employees and executives caught up in misconduct; from market timing to insurance bid-rigging to analyst fraud. A variation of the view is “if everyone is doing it, it can’t be wrong.” Such self-serving rationalizations certainly help the individuals engaged in unethical conduct live with themselves, but they seem not to stand up well as a defense in a criminal trial.