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When Kilgannon makes the remark under his breath that he needs a bigger desk to hold all the evidence documents, the judge volleys back… “A bigger desk is just a bigger mess. I can attest to that” and the courtroom erupts in laughter.

Beyer admits to Def. Atty. Neal that is was actually in only one conversation that Jensen stated she didn’t want to be emailing about stock option pricing, and that she never gave an actual explanation as to why.

APB 25?  FAS 123? I’m so confused? CEO’s are confused?  How can we expect these jurors to understand in just a few days/weeks and be clear enough to decide upon one’s future?

We held onto this post until we could review our notes and prior case info on-line. It appears in our opinion as if the Prosecution was trying to mislead the jury. They stated Reyes was able to backdate and issue his own options based on his name being on a schedule. When in REALITY the Board of Directors was responsible for picking the date, choosing the # of options and signing off on the grant itself. This is a big are you KIDDING me moment. The GOVT has a responsibility to be certain any evidence or theory they produce should be factual….wow not sure what the Defense should do about this…scary.

Based on the first three days and the witnesses offered up I can not see the case against Reyes. Backdating went on…which is not illegal. Finance knew about the practice, proven by the Govt, the Board of Directors knew proven by the Govt, their legal council knew, as proven by the Govt. Not sure how the Govt is going to prove their case.

Defense Atty Neal spoke of reasons why the prosecution case fails:

-Finance Dept made the decisions..

- Backdating is NOT illegal

- Brocade did in fact make ample disclosures ( FAS 123- a much better accounting standard)

- Reyes did not deceieve.. nor had the intent to.

-And the case is focused on an abandoned standard (APB 25)

Based on the evidence presented today, in my opinion, the defense came out on top.  Two witnesses were called, both from the prosecution side.  However, witness one kind of sold it for the defense.  And I had no clue where the prosecution was going with the second witness?

“But for APB 25, there would be no case.”

In my opinion it seems quite mind boggling that the Reyes case is centered around APB 25, a discredited accounting practice which was abolished in  December 2004, and no longer used by any company. It was highly criticized method for being too confusing and unclear, and yet it still seems to play such a major role.

If KPMG even needed Guidance on it, how are CEOs and other non-accountants expected to understand it???

It was weird how the Prosecution supporters came for opening arguments then buzzed off after the lunch break. Guess they will come for the beginning and end….no time for the in between.

Defense Attorney Stephen Neal was telling a story about how his children were playing hide and seek….Pros Anderson objected to relevance….and Judge Breyer said he’d like to hear how it turned out and cracked up everyone much to dismay of the Prosecution.  Very funny….

Basically the prosecution needs to prove:

1. Greg Reyes’ intent to deceive investors;

2. and, the critical links between backdated options and non-compliance with the APB 25 .

But can they do it?  That’s going to be tough with the facts the defense is presenting.

Judge Breyer had a great way about him with both sides. His respect for the task the jury was about to undertake was well phrased and it appears things are off to a quick start.

The first witness called, J. Bidzos, Executive Chairman of VeriSign Inc. was called by the prosecution.  Yet, at the end seemed like a witness for the defense.  The prosecution lacked points to tie Reyes in a negative way.