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Govt is on Direct with…Witness is the current CFO at Brocade. Joined Brocade May 2003. Joined as Treasurer and Corporate Controller. Replaced Bob Bossy. Direct by Pros. Reeves focusing on internal investigation about back dating. Derlamo was responsible for entering accounting for stock options. Focusing on effective date of the grant. Important to the Books and Records of the company. Witness testifying about options in the money and compensation charge/expense.

Not aware of any stock option charges for any employees in 2003 on the companies Profit and Loss statement. Not sure if this is a bad thing yet…

Focusing on Brocade language around how the account for stock options expenses according to APB 25. Witness states they followed to the best of their knowledge what was laid out in the 10K.

Seems to be focusing on the granting of stock at 100% of the Fair Market Value of the stock on the date of the grant.

Now focusing on Brocade Reg Doc….asking witness to review he Stock Plan.
Witness did not work with Mr. Reyes direct….seems it was in passing.

Witness is not an Accountant..can’t recall a number any responses based on the Defenses cross…didn’t actually cover or follow Brocade.

The Fidelity Stock Options Guidelines were guidelines not rules.

Judge Breyer has another great remark about the test alarm and cracks up the courtroom. Defense Attorney Neal lead with his own remark about the alarm being the ultimate objection.

Witness has no direct knowledge of Fidelity’s investment in Brocade. So why was he on the stand? Witness has no idea about APB 25 or the impact on the financials of a company.
So based on the stock options not exercised…Fidelity didn’t lose anything. The word of the day…straw. Cross will continue after the break.