Former Brocade CEO Greg Reyes and his former human resources VP Stephanie Jensen pleaded not guilty to mail and securities fraud charges in San Francisco federal court yesterday.

The trial will now become a test case for the SEC's wide-reaching investigation into stock option backdating, which has swept through Silicon Valley.

The former Brocade pair are accused of manipulating executive stock option records to make it appear they were granted at an earlier date to give a bigger return. While not itself illegal at the time, authorities allege the backdating was not reported properly, misleading the market and causing the storage switch maker to restate its 1999 to 2004 financials.

At an earlier dismissal hearing, Reyes' lawyer said his client had not intended to mislead investors, but attract employees.

Reyes is out on $2m bail, with Jensen bonded at $500,000. A trial date was not set.

Reyes was the first big name to be indicted by by financial investigators. Similar allegations against former Comverse chief Kobi Alexander have not yet been aired in court, as the turned fugitive earlier this month. He was quickly caught in Sri Lanka after making a Skype call. ®

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