Dumb Corporate Email No. 1,256

How many times do I have to tell you senior execs to stay away from emails doing something shady? When will you start to listen?

The latest alleged miscreant to ignore my advice is Greg Reyes, former CEO of Brocade Communications, whose options backdating case goes to a federal jury tomorrow. If he goes down, it will be due to the fact he, like so many others, decided it was less work to use email than dial the phone.

Evidence of my wisdom, and his folly, is this from The Wall Street Journal’s reportage of closing arguments. Note that Reyes is accused of illegally backdating options 2000-2004.

“In summarizing the government's case, Mr. Reeves ran through evidence for 10 reasons why prosecutors allege Mr. Reyes knew full well that backdating was illegal. As the prosecutor spoke, he left a large whiteboard on an easel facing the jury, displaying the government's Reason No. 1: An October 2004 email that Mr. Reyes sent to another company's board member in which the Brocade CEO wrote, in capital letters: "IT IS ILLEGAL TO BACK-DATE OPTIONS GRANTS.''

More Corporate Miscreants

Most Americans believe in capitalism because they know it offers the most opportunity and individual freedom. That, not class anger, is why regular folks hate corporate leaders who lie, cheat and steal.

I'm no different. But what really drives me nuts is the arrogance and stupidity of the corpo-thieves, something I noted in an earlier post.

Now, I come across the story of Gary Min who pleaded guilty to stealing an estimated $400 million in DuPont technology. There's no evidence that Min tried to transfer the information to anyone, but he faces up to 10 years in prison and a fine of $250,000. In contrast, pioneer corporate thief Michael Miliken emerged from two years in prison with $500 million in the bank. That's the dumb part.

Then there's the arrogance factor. According to The Wall Street Journal, prosecutors are considering filing criminal charges against former Broadcom CFO William Ruehle (photo above) who emailed a colleague:

"I VERY strongly recommend that these options be priced as of December 24."

As the newspaper noted: "Broadcom's share price rose 23% between the two dates. The pretense that the options had been granted on the earlier date made them extra valuable."

If nothing else, Ruehle should be convicted of being too lazy to pick up the phone.

Stupidity Is No Defense

The Wall Street Journal today chronicles the resignations of two more corporate executives who guaranteed themselves big profits by backdating options grants. This time it was Mark King, CEO of Affiliated Computer Services Inc., and Warren Edwards, the company's CFO.

Edwards lawyer says, "He engaged in no intentional misconduct and acted in good faith at all times in connection with the company's longstanding and historic options granting practices." King’s lawyer says, "He acted at all times in good faith and did not engage in any intentional misconduct."

These lads were running a $5.4 billion corporation. Now they declare they were too dumb or too naïve to understand that backdating option grants is illegal unless fully and promptly disclosed to shareholders.