Reyes may be sentenced to federal prison for as little as six months or more than 20 years, and might have to pay millions of dollars in fines as well.

Improper backdating of options was prevalent throughout Silicon Valley in the late 1990s. The Securities and Exchange Commission investigated over 140 companies, and many of those investigations have led to criminal inquiries by the U.S. Attorney's Office in San Francisco.

In light of the Reyes conviction, "I expect to see more cases filed criminally," said Peter J. Henning, a professor at Wayne State University Law School and author of the White Collar Crime Blog.

What About Apple?

The Reyes conviction brings more attention to investigations of backdating at Apple, where CEO Steve Jobs received backdated options (which he later returned), longtime CFO Fred Thompson was forced out, and general counsel Nancy Heinen "mysteriously departed," as the Wall Street Journal put it at the time.

"It's certainly possible" that Heinen would be charged, Henning said. "As for Steve Jobs, I doubt it." The U.S. Attorney would set a higher standard for a case against Jobs "because of the major effect it would have on the stock price," he added.

"It could be argued that backdating at Apple and Pixar were isolated cases," he said, whereas the Brocade backdating involved hundreds of options over several years.

The Pressure Mounts

As with Heinen, in-house lawyers and CFOs are particularly at risk for criminal prosecution, Henning said. "This case certainly sends a chill through in-house lawyers," he said, because they typically handle the options paperwork. Where documents were falsified, it was often in-house lawyers who engaged in the fraud.

Prosecutors won a difficult case against Reyes because he did not personally benefit from his crimes. In many other cases, personal gain will be much easier to show. "Defense lawyers will be spooked by this," Henning said. "They may start pleading out their clients. The pressure on general counsels and CFOs to finger someone higher than you will be huge."

Backdating is not illegal in itself, but failure to account for it is. Why didn't those lawyers refuse to countenance or participate in something as clearly illegal as falsifying documents? "It's how many of these corporate crimes occur," Henning said. "For in-house counsel, the pressure to go along with management is enormous. That's not to say the lawyer shouldn't stand up to the CEO and even quit -- he should -- but it's a very difficult position for a lawyer to be in."

Where Was the Loss?

In the sentencing phase, a critical issue will be how to calculate the loss that Reyes' crimes caused. "We're pretty far afield from traditional fraud here," Henning said. On his blog, Henning predicts that the government will use Brocade's $50 million restatement as a measure of loss, while the defense will say there was no loss.

The judge is not required to use advisory sentencing guidelines, but the amount of loss is likely to be a key indicator of Reyes' penalty. The sentencing phase starts Novevmber 21. Brocade human resources chief Stephanie Jensen will be tried separately.

Reyes' lawyer Richard Marmaro expressed "total shock" at the conviction and said he will file an appeal.