Brocade options case conviction

A federal jury Wednesday convicted a former human-resources chief at Brocade Communications Systems Inc. of conspiracy and falsifying records in the latest trial stemming from option-backdating probes that scores of companies are facing.

Stephanie Jensen was the second former executive at San Jose-based Brocade, a maker of switches used to connect corporate computers to data-storage machines, to be found guilty at trial in the case.

Brocade’s former chief executive, Gregory Reyes, is to be sentenced Dec. 19, after a separate jury in the same San Francisco courtroom convicted him four months ago of 10 counts related to option backdating.

Prosecutors alleged that Jensen doctored offer letters and other documents from 2000 to 2004 to make it appear that prized new workers were hired -- and awarded stock options -- before they actually were.

Backdating of option grants, which can increase the profit employees make on the options, is legal as long as it is disclosed and accounted for. Authorities alleged that Reyes and Jensen illegally inflated Brocade’s earnings by hiding the backdating from investors and regulators.

Jensen’s lawyer argued that her client didn’t have a finance background and had simply implemented compensation practices that were already in place when she joined the company without knowing that they were wrong or possibly illegal.

Prosecutors said statements Jensen made to colleagues revealed she knew she was doing something wrong.

Jensen and her lawyer declined to comment after the verdict.

Brocade and about 100 other companies have announced restatements totaling more than $12 billion to correct their accounting of past stock-option grants.

In May, Brocade agreed to pay a $7-million penalty to settle SEC charges in the case.