Reyes, Stoneridge, and the Criminalization of Corporate Law

Gregory Reyes, the former CEO of Brockade, was sentenced Wednesday in connection with his conviction in a backdating case to 21 months in prison and ordered to pay a $15 million fine. We juxtapose the decision with the Supreme Court's opinion in Stoneridge. In that case, the Supreme Court gave as one of the reasons for not extending liability to vendors the fact that "[s]econdary actors are subject to criminal penalties." Stoneridge, at 15. It seems that the majority in Stoneridge are comfortable with the use of the criminal laws to sanction what might otherwise be left to the civil realm. I suspect that Gregory Reyes would take issue with the approach.

By the way, Reyes got six additional months because he stated in an affidavit attached to a motion to sever that he had not backdated. Later at trial he apparently admitted that he had, a discrepancy counsel contended was a result of "poor drafting." The judge was apparently not happy with the inconsistency, suggesting, according to one report, that it amounted to obstruction.

Primary materials on this case are posted on the DU Corporate Governance website.