The jury in a San Francisco federal court today found former Brocade Communications Systems C.E.O. Gregory Reyes guilty of conspiracy and securities fraud stemming from his backdating of options.

Reyes' case represents the first criminal conviction of a chief executive for charges related to backdating, which was the widespread practice of boosting executive compensation by pegging stock options to dates that would be more lucrative. More than 200 companies have been investigated for backdating, and following internal probes, many have admitted to the practice.

Prosecutors in the Reyes case argued that the practice is illegal if the changes were not properly disclosed and recorded as an expense. They accused Reyes of falsifying records and lying to investors and auditors to cover up the backdating. He faces up to 20 years in jail.

But the judge who presided over the case had questioned whether or not Reyes knew enough about the accounting rules to warrant conviction, Bloomberg News notes. The judge could still overturn the jury's verdict.

This conviction will likely set a precedent for future cases brought by the Department of Justice. So far, at least 10 executives have been charged with backdating-related crimes. Many more are still under investigation.

Related links:

• Reuters: Jury Convicts Brocade Ex-C.E.O. in Options Trial
  
• WSJ.com: Former Brocade C.E.O. is Found Guilty