Companies

Brocade penalised for illegal backdating

Brocade Communications Systems will pay $7m to settle charges of fraudulent stock options backdating.

The US Securities and Exchange Commission (SEC) accused Brocade of falsifying its reported income from 1999 through 2004, repeatedly granting backdated stock options and misstating compensation expenses.

The US regulator alleged that in order to avoid reporting to investors the hundreds of millions of dollars in undisclosed compensation expenses, former executives of Brocade created records to make it falsely appear that options had been granted at a lower price on an earlier date.

Linda Chatman Thomsen, SEC director of enforcement, said: “Falsifying compensation expense is no less fraudulent than falsifying revenue, and we continue to be vigilant in policing fraudulent accounting practices”.

June 2007