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Larry Ribstein of Ideoblog deserves some sort of blog award. Early on, he correctly called the back-dating brouhaha of 2006 what is was, a media-driven pseudo scandal. Now here we are in 2007 and the scandal bubble has burst.

The one big fish the authorities got was Greg Reyes, the former head of Brocade. In August he was convicted of conspiracy and fraud. Ribstein said that Reyes was “trying to maximize shareholder value by recruiting the best people, not line his pockets, and where it's unlikely any misstatements hurt investors.”

Now it looks like they’re going to lose this case as well. Andrew Ross Sorkin reports in today’s NYT:

A principal witness in the stock-options backdating trial that ended in a conviction of Gregory L. Reyes, the chief executive of Brocade Communications Systems Inc., has told associates her testimony may have been untrue, according to court documents.

In affidavits, friends and associates of the witness, Elizabeth Moore, a Brocade employee who testified that Mr. Reyes deceived the company, said she had privately retracted her testimony.

For uncovering the back-dating scandal, The Wall Street Journal won a Pulitzer Prize.

Posted by edelfenbein at December 12, 2007 1:12 PM