SUSAN F. LA MARCA (Cal. Bar No. 215231)

MARC J. FAGEL (Cal. Bar No. 154425) 

SUSAN F. LA MARCA (Cal. Bar No. 215231) 

[email protected] 

JUDITH L. ANDERSON (Cal. Bar No. 124281) 

[email protected] 

JEREMY E. PENDREY (Cal. Bar No. 187075) 

[email protected] 

ELENA RO (Cal. Bar No. 197308) 

[email protected] 

Attorneys for Plaintiff 

SECURITIES AND EXCHANGE COMMISSION 

44 Montgomery Street, Suite 2600 

San Francisco, California 941 04 

Telephone: (41 5) 705-2500 

Facsimile: (415) 705-2501 

UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF CALIFORNIA 
SAN JOSE DIVISION 
.! 
, c; LJy 4431.1 
p, 

-<.A 
15 
I1 
SECURITIES AND EXCHANGE COMMISSION, 
I 
Civil Action No. 
Plaintiff, 
17 
VS. 
18 
LISA C. BERRY, 
l9I1 
Defendant. 
I 
1 
Plaintiff Securities and Exchange Commission (the "Commission") alleges: 
21 
SUMMARY OF THE ACTION 
22 11 
23 
/ 
1. 
From 1997 through 2003, the in-house corporate attorney for two different public 
11 
24 companies caused each of those companies to report false financial inlormation to the investing 
25 public by repeatedly backdating stock option grants and 
falsifying related paperwork. Defendant 11 
26 Lisa C. Berry devised the improper backdating scheme while serving as General Counsel of KLA- 
II 
27 Tencor Corporation ("KLA"), and then implemented similar practices after assuming the position of 
I1 
28 11 General Counsel for Juniper Networks, Inc. ("Juniper"). By facilitating the selection of fabricated 
COMPLAINT 1 

option grant dates, Berry caused KLA, and then Juniper, to conceal hundreds of millions of dollars 
of  employee and executive compensation from investors. 
2. Under well-settled accounting principles in effect throughout the relevant period, KLA 
and Juniper were not required to record an expense in their financial statements for options granted to 
employees at the then-current market price of the company's stock ("at-the-money"), but 
were 
required to record expenses for any options granted below the current market price ("in-the-money"). 
To help KLA and Juniper attract and retain executives and employees with more valuable "in-the- 
money" options, without disclosing to shareholders the hundreds of millions of dollars in 
compensation expenses associated with those grants, Berry, working with others, established 
procedures to falsify the options grant records to make it appear that the options had been granted at- 
the-money. 
3. 
On repeated occasions fiom 1997 until she left KLA 
in 1999, Berry and others caused 
KL,A to backdate stock option grants to dates when KLA7s stock price closed much lower. Just prior 
to her departure from KLA, Berry provided "how to" instructions to other employees so that KLA 
could continue the improper backdating procedures. 
In 1999, when Berry moved to Juniper just 
before it became a public company, she immediately instituted similar backdating procedures. From 
mid-1999 through mid-2003, for dozens of different grants to groups of employees, Berry similarly 
caused Juniper to issue backdated options. 
4. 
By selecting option grant dates and prices with hindsight, Berry and others at the 
respective companies caused KLA, and then Juniper, to issue to executives and employees valuable 
in-the-money options without disclosing them, and further caused each company to materially 
misrepresent their publicly-reported income (or losses), and to falsely represent in public filings with 
the Commission that each company had no expenses related to their stock option grants. 
5. 
By engaging in the acts alleged in this Complaint, Berry, among other things, violated 
the 
antifraud provisions of the federal securities laws, falsified public companies7 books and records, 
and caused both KLA and Juniper to falsely report their financial results. The Commission seeks an 
order enjoining Berry from future violations of the securities laws, requiring her to disgorge ill-gotten 
COMPLAINT 2 

gains with prejudgment interest and to pay civil monetary penalties, barring Berry from serving as an 
officer or director of a public company, and providing other appropriate relief. 
JURISDICTION AND VENUE 
6. 
The Commission brings this action pursuant to Section 20@) and 20(d) of the 
Securities Act of 1933 ("Securities Act") [15 U.S.C. 
5 77t@) and 77t(d)] and Sections 21(d) and 
21(e) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. $5 78u(d) and 78u(e)]. 
7. This Court has jurisdiction over this action pursuant to Sections 20@) and 22(a) of the 
Securities Act [15 U.S.C. 
5 77t(b) and 77v(a)] and Sections 21(d), 21(e) and 27 of the Exchange Act 
[15 U.S.C. 
5 78u(d), 78u(e) and 78aal. 
8. 
Berry, directly or indirectly, made use of the means or instrumentalities of interstate 
commerce, or of the mails, or of the facilities of a national securities exchange in connection with the 
transactions, acts, practices, and courses of business alleged herein. 
9. This Court is a proper venue for this action pursuant to Section 22 of the Securities 
Act [15 U.S.C. 
5 77~1,and Section 27 of the Exchange Act [15 U.S.C. $77aa] because acts, 
transactions, practices, and courses of business constituting the violations alleged in this Complaint 
occurred within this District and Berry resides in the Northern District of California. 
INTRADISTRICT ASSIGNMENT 
10. Intradistrict assignment to the San Jose Division is proper pursuant to Civil Local Rule 
3-2(e) because acts or omissions giving rise to the Commission's claims occurred, among other 
places, in Santa Clara County, California. 
DEFENDANT 
11. Berry, age 49, resides in Los Gatos, California. From September 1996 through June 
1999, Berry was Vice President and General Counsel of KLA. From June 1999 to January 2004, 
Berry was General Counsel of Juniper, and beginning in July 1999, also served as Vice President and 
Secretary. Beny majored in accounting in college, received her juris doctorate and then obtained a 
masters of law in taxation. Berry is licensed to practice law in California, Arizona and Florida. 

RELEVANT ENTITIES 

12. KLA is a Delaware corporation headquartered in San Jose, Califomia that makes and 
sells systems for the semiconductor industry. At all relkvant times, KLA's common stock was 
registered with the Commission pursuant to Section 12 of the Exchange Act and traded on the 
NASDAQ National Market. At all times relevant to this action, KLA used a fiscal year ending on 
June 30. 
13. Juniper is a Delaware corporation headquartered in Sunnyvale, California that makes 
and sells internet-related networking products. From June 1999 through 2004, Juniper's common 
stock was registered under Section 12 of the Exchange Act and was traded on the NASDAQ National 
Market. At all times relevant to this action, Juniper used a fiscal year ending on December 3 1. 
FACTUAL ALLEGATIONS 
A. 
Berry and Others Backdated Options at KLA 
a. KLA's Stock Option Disclosures 
14. Throughout Berry's tenure as =A's General Counsel, KLA regularly used employee 
stock options as a form of compensation to recruit, retain, and incentivize key employees. Each 
option gave the grantee the right to buy KLA common stock 
from the company at a set price, called 
the "exercise" or "strike" price, on and after a fhture date. The option was "in-the-money" when 
granted if the market price of =A's common stock exceeded the option's exercise price. The option 
was "at-the-money" when granted if the market price of =A's common stock and the exercise price 
were the same. 
15. From approximately July 1997 through June 1999, KLA's primary stock option plan 
specifically prohibited the grant of in-the-money options to employees and executives. The plan 
required that the board of directors set the exercise price of the company's stock options, and that the 
price on the date of grant could not be less than fair market value 
-that is, the closing price of KLA's 
common stock on the date when granted. 
16. On August 7, 1998, KLA filed with the Commission a registration statement on Form 
S-8 which attached the Company's primary stock option plan, and incorporated each of these key 
terms. Berry reviewed this statement and signed it as the company's General Counsel. 
COMPLAINT 4 

17. 
KLA also publicly represented, in audited financial statements and other filings with 
the Commission made fkom 1997 through 1999, that its option grants were made at fair market value. 
In other words, KLA purported to issue options at-the-money, not in-the-money. 
18. 
KLA also stated 
in public filings that its audited financial statements conformed with 
generally accepted accounting principles (known as 
"GAAP"). In particular, KLA disclosed that it 
followed Accounting Principles Board's Opinion No. 25, "Accounting for Stock Issued to 
Employees" ("APB 25") in accounting for employee stock options. Under APB 25, public companies 
recorded an expense on their financial statements for the in-the-money portion of any options granted. 
Consequently, granting in-the-money options to employees could have a significant impact on the 
company's expenses and income (or loss) reported to the shareholders. APB 25 also allowed 
companies to grant employee stock options without recording any compensation expense, so long as 
the option exercise price was not below the closing market price for the company's stock on the date 
of the grant. 
19. 
KLA made the statements about its accounting for stock options in accordance with 
APB 25 in the notes to its audited financial statements, including in its annual reports to shareholders, 
filed with the Commission on Forms 10-K for its fiscal years 1998 and 1999. 
20. 
KLA also filed proxy statements that were sent to shareholders announcing the annual 
meeting of shareholders. 
In the proxy statements dated September 28, 1998 and October 15, 1999, 
K1;A provided information on executive compensation and executive option grants in the last fiscal 
year from the date of filing. The discussion on executive compensation 
in each proxy statement 
represented. that stock options were granted at the market price on the date of the grant. 
In addition, 
KLA's proxy statements filed on September 28, 1998 and October 15, 1999 stated that one of the 
material terms of certain grants to certain executives was that the exercise price of the options was the 
fair market value of the company's common stock as of the date of grant. These statements also were 
incorporated by reference into KLA's Forms 10-K. 
21. 
Berry reviewed, discussed, 
and finalized the company's annual reports filed with the 
Commission on Forms 10-K and its proxy statements filed with the Commission on September 28, 
1998 and October 15, 1999, as KLA's General Counsel. 
COMPLAINT 5 

b. Berry Participated in the Scheme to Backdate KLA Option Grants 
22. 
In 1997, KLA's board of directors delegated to a Stock Option Committee consisting 
of three directors the authority to grant stock options to non-officer employees. The board's 
delegation required that at least two members of the committee approve each options grant. 
23. 
From mid-1 997 through mid-1 999, Berry worked 
with KLA's Stock Option 
Committee, which consisted of board members with such delegated authority. Berry oversaw the 
administration of the stock option grant process. 
24. 
Under procedures put in place by Berry and the Stock Option Committee, the option 
grant approvals did not reflect the date the Stock Option Committee met to approve them. Instead, 
grants to employees by the Stock Option Committee were deliberately delayed to allow the selection 
of historically low stock prices with the benefit of hindsight. 
25. 
Berry directed Human Resources ("HR") and stock administration department 
employees to prepare the grant approval paperwork. Berry then directed the process for selecting the 
exercise price by using historical information regarding low KLA stock prices of the preceding 
weeks. One or more members of the Stock Option Committee then executed the grant paperwork 
prepared at Berry's direction, bearing false grant dates that had been selected using.hindsight. 
26. 
The grant approvals were then provided to HR and stock administration personnel who 
entered the grant information, including the backdated exercise prices, into KLA's options tracking 
database system. 
27. 
In this manner, Berry and others at KLA repeatedly backdated grants to newly hired 
and recently promoted employees ("new hire" grants), as well as to current employees eligible for 
options at the end of KLA's annual review process (known as "peak performance" or "focal" grants), 
among others. These backdated grants reflected historically low prices for KLA stock for the weeks 
prior to the date on which the price was selected. 
28. 
For example, KLA awarded several grants to employees bearing a purported grant date 
of August 3 1, 1998, at an exercise price equal to that day's closing stock price of $10.63. The grants 
included peak performance grants to officers and non-officers, as well as a new hire grant. However, 
these grants were actually made over a span of a couple weeks during October 1998, when KLA's 
COMPLAINT 6 

stock was trading between $10.75 and $13.81, and were backdated to August 3 1, 1998. The August 
3 1 stock price of $1 0.63 was the lowest closing price for =A's common stock for at least three 
months prior to October 1998. 
29. 
Berry personally benefited fiom the grant backdated to August 3 1, 1998, as she 
received options to purchase 22,000 shares at the lower $10.63 exercise price. 
30. 
In another example in late 1998, Berry and others at KLA backdated a one-time 
hundred-share grant made to thousands of KLA employees. The backdated grant used the date of 
October 19, 1998, and the closing stock price on that date of $27.6250 as the options' exercise price. 
However, Berry and others actually selected the price and prepared the grant during December 1998, 
by which time KLA's stock price had risen above $40. 
3 1. 
A KLA 
HR employee specifically questioned Berry about the propriety of backdating 
the grant to October 19, 1998. The employee pointed out to Berry that using the date in the past when 
the price was lower raised the question of "whether we would be able to pass the 'audit' test of not 
setting a date in the past in order to get a better price." Berry responded, acknowledging she 
understood, but nevertheless allowed KLA to use a backdated grant date and corresponding low price 
without appropriately accounting for the in-the-money option grant. 
32. 
On approximately ten occasions for grants backdated to July 3 1, 1997 through grants 
backdated to June 15, 1999, Berry and others thus used hindsight to choose option exercise prices for 
new hire, peak performancelfocal and other grants made to KLA employees and executives. 
33. Berry was involved in most facets of KLA's options granting process. Berry 
participated in conference calls and communications discussing accounting rules related to stock 
options. She also wrote a memorandum in November 1998 in which she acknowledged that repricing 
executive stock options by using an earlier grant date with a lower price would result in KLA having 
to take "a charge to its 
P&L." 
34. In June 1999, shortly before her departure fiom KLA, Berry instructed employees in 
KLA's 
HR department how to backdate stock option grants so that they could carry on with the 
scheme after she had departed. Berry advised the 
HR personnel to: (1) create a list of newly hired 
employees; (2) wait several weeks; (3) obtain a list of =A's daily closing stock prices for the past 
COMPLAINT 7 

several weeks; (4) highlight the three or four lowest prices; and (5) forward the new hire list and the 
highlighted stock price list to KLA's Stock Option Committee. As a consequence, KLA continued to 
backdate certain stock option grants in this manner following Berry's departure from the company. 
35. 
Berry knew, or was reckless in not knowing, that the grant documentation that she 
helped prepare falsely represented the date on which stock options were actually granted to 
employees. Berry further knew, or was reckless in not knowing, that the stock option grant 
documentation that reflected the false information about the dates of the grants and exercise prices for 
the grants, resulted in KLA's failure to properly record expenses for these in-the-money grants and 
rendered KLA7s public statements about its stock options grants false and misleading. 
c. KLA's Publicly Reported Financial Results 
36. 
As a public company, KLA filed with the Commission annual reports that included 
audited financial statements, certified by the companies7 outside auditors. =A's failure to record 
a 
compensation expense in connection with the backdated, in-the-money option grants resulted in 
materially overstated net income 
in KLA's financial statements throughout Berry's tenure at KLA, 
and even after she had left. Because the in-the-money options continued to affect the financial 
statements as employees became eligible to exercise their stock options, those misstatements 
continued through 2003. 
37. 
In particular, KLA's failure to record expenses related to stock options granted in-the- 
money resulted in a 4 percent overstatement of KLA7s net income in 1998, and a 46 percent 
overstatement of net income in 1999. KLA included those materially false representations about its 
financial results in its annual reports to shareholders filed with the Commission on Forms 10-K for its 
fiscal years 1998 and 1999. Berry reviewed and discussed =A's false and misleading annual reports 
(and drafts of those reports) filed with the Commission on Forms 10-K for the fiscal years 1998 and 
1999, as General Counsel of KLA. 
38. KLA also'filed quarterly reports with the Commission on Forms 10-Q that included 
financial statements for each of its first three fiscal quarters. =A's quarterly reports filed on Forms 
10-Q for each of the company's first three fiscal quarters of 1997 and 1998, and for the quarterly 
period ended March 3 1, 1999, contained materially false and misleading financial statements due to 
COMPLAINT 8 

the company's failure to record compensation expenses associated with granting undisclosed in-the- 
money options. Berry also reviewed, discussed, and helped finalize, each of these false and 
misleading Forms 1 0-Q, as General Counsel of KLA. 
39. 
KLA also sold securities pursuant to offering documents, including registration 
statements on Forms S-8 filed with the Commission on January 30, 1998, August 7, 1998 and 
December 4, 1998, which incorporated the false financial statements. Berry reviewed and prepared 
each of these false and misleading Forms S-8, as General Counsel of KLA. 
In addition, Berry signed 
the Forms S-8 filed with the Commission on January 30,1998 and August 7,1998. 
40. The representations to =A's shareholders in its public reports about the company's 
stock option program, including how KLA priced options and accounted for them and its financial 
results, were untrue. Berry knew, or was reckless in not knowing, that those statements and financial 
results were untrue, because she engineered with others and participated in the scheme to create 
option grant approvals that falsely represented the date of the grant to make it appear as though KLA 
was not required to record an expense for its backdated options. 
B. Berry Similarly Caused Juniper to Backdate Stock Option Grants 
41. On June 18, 1999, Berry became Juniper's General Counsel. In applying for the 
position, Berry held herself out as having experience in stock administration and the review of 
financial statements. 
a. Juniper's Stock Option Disclosures 
42. 
On June 24, 1999, Juniper became a public company through an initial public offering 
of its stock (an "IPO). Juniper grew rapidly following its IPO, hiring hundreds of employees 
through early June 2003. To support this rapid growth and to achieve its recruiting and compensation 
objectives, Juniper relied heavily on stock options as a recruiting and retention incentive. By 
compensating employees with stock options, Juniper avoided paying greater salaries or other forms of 
compensation that would have been necessary to attract and retain employees. Juniper granted stock 
options to nearly all new full-time employees. Juniper also granted options to existing Juniper 
employees (called "ongoing" options), based on performance or other factors. 
COMPLAINT 9 

43. Juniper publicly represented, in audited financial statements and other filings with the 
Commission made for or during its fiscal years 1999 through 2003, that its stock option grants were 
made at fair market value. 
In particular, Juniper stated in its annual reports to shareholders filed with 
the Commission on Forms 10-K for its fiscal years 1999 through 2002: "Incentive stock options are 
granted at an exercise price of not less than the fair value per share of the common stock on the date 
of grant." Juniper further stated in each of those reports on Forms 10-K that, although the company's 
plans allowed for the granting of so-called "nonstatutory" stock options at an exercise price of not 
less than 85 percent of the then-market value, "no nonstatutory stock options have been granted for 
less than fair market value on the date of the grant." 
44. Juniper's public filings also affirmatively stated that the company accounted for its 
employee stock option plans in accordance with GAAP, and particularly, that the company followed 
APB 25. Thus, in each of its Forms 10-K filed with the Commission for fiscal years 1999 through 
2002, Juniper represented that it had "elected to follow APB 25," and that "[blecause the exercise 
price of the Company's stock options equals the market price of the underlying stock on the date of 
grant, no compensation expense is recognized." 
45. Juniper also sent to shareholders proxy statements announcing its annual meetings of 
shareholders for 2000 through 2003, filed with the Commission on April 13,2000, March 28,2001, 
April 11,2002 and March 28,2003. The proxy statements for 2000,2001 and 2003, in describing 
executive compensation and particularly options granted to officers, represented that "options are 
granted at fair market value on the date of grant." Similarly, the 2002 proxy statement, in responding 
to a shareholder proposal regarding the company's repricing (or regranting) of stock options, 
represented that employees at Juniper who have been awarded stock options "have a right to purchase 
stock in the future at a price which is the fair market value on the date of the stock option grant." 
46. Berry reviewed Juniper's annual reports filed on Forms 10-K, and other periodic 
reports filed with the Commission, while she was Juniper's General Counsel. Berry was also 
responsible for drafting Juniper's proxy statements announcing annual meetings of shareholder, 
which she signed as Juniper's General Counsel. 
COMPLAINT 10 

b. Berry's Scheme to Backdate Juniper Option Grants 
47. On July 21, 1999, based on Berry's recommendation, Juniper's Board of Directors 
created a three-member Stock Option Committee, to which it delegated authority to grant stock 
options to Juniper's non-executive employees. Throughout her tenure with Juniper, Berry served as a 
member of the Stock Option Committee, along with two other persons, Juniper's chief executive 
officer and chief financial officer. 
48. Berry was responsible for overseeing Juniper's stock option granting process, 
including supervising Juniper's stock administrator. From mid-1999 through mid-2003, Berry used 
the procedures she put in place for most Juniper stock option grants by backdating the grants to a date 
in the past when Juniper's closing stock price was lower. Berry then routinely created backdated 
"minutes" for purported Stock Option Committee meetings that never occurred. 
i. Berry Backdated New Hire Stock Option Grants 
49. Beginning in the second half of 1999, Berry routinely prepared backdated stock option 
grants to issue options to recently hired employees of Juniper. For these new hire grants, Ben. 
collected the names of recently hired employees and had lists prepared. She then selected as the 
exercise price of the new hire grants the closing price of Juniper's stock on a date in the past, 
reflecting the low closing price during a particular period around the time the employees were hired. 
For each backdated grant fiom 1999 through 2003, Berry then created Stock Option Committee 
meeting "minutes" that falsely represented that the Stock Option Committee had met on the date of 
the low closing price and granted options on that date. 
50. Berry signed the backdated committee "minutes" as a Stock Option Committee 
member. 
In addition, for each backdated grant she either presented the minutes to the other Stock 
Option Committee members for signature or stamped the minutes with a signature stamp she 
maintained bearing the other Stock Option Committee members' signatures. 
5 1. 
Once Berry selected a backdated grant date and a corresponding exercise price, she 
informed Juniper's stock administrator, who then entered the grants into Juniper's stock option 
tracking software using the backdated date as the grant date. Juniper did not reflect in its books an 
sxpense related to the in-the-money portion of the options. 
COMPLAINT 11 

52. 
For example, Juniper granted options to six new Juniper employees on the purported, 
but false, grant date of October 27, 1999. The six employees were hired on Monday, October 25, 
1999, at which time Juniper's stock traded at $257.75. Juniper's stock price dipped to a low of 
$249.94 on Wednesday, October 27, then rose to $275.63 by the end of the week. Berry actually 
selected the grant date in mid-November 1999, when Juniper's stock was trading around $283.50, 
using information about Juniper's historical closing prices for its stock during the week the 
employees were hired. 
53. 
Similarly, Juniper granted stock options to employees hired between October 8,2002 
through January 2,2003, using the backdated January 2,2003 closing price of $7.36 as the purported 
"fair market value" of the stock on the grant date. The Stock Option Committee never met on 
January 2,2003. Instead, Berry selected that date during mid-February, when Juniper's stock was 
trading around $9 per share. The January 2,2003 closing price for Juniper's stock, $7.36, used as the 
exercise price, was Juniper's lowest closing price of the year up to the time Berry selected the grant 
date. 
54. Using dates selected with hindsight between mid-June 1999 through the end of May 
2003, Berry backdated more than 50 grants to groups of new employees. More than $300 million in 
expenses associated with the in-the-money portion of those grants were not disclosed by Juniper as a 
consequence of Berry's scheme. 
ii. Berry Backdated Juniper's "Ongoing" Stock Option Grants 
55. 
From her arrival in 1999 through mid-2003, Berry also backdated performance-related 
grants to existing employees and officers, which Juniper called "ongoing" grants. Berry thus 
backdated large grants to officers and employees that were made to create retention and performance 
incentives (and which at times included new hires), on approximately nine occasions throughout her 
tenure. 
56. 
For instance, Juniper granted options to a large group of existing employees and 
officers (and to certain new hires), which it called 
an "evergreen" grant, using the backdated grant 
date of October 4, 1999. The Stock Option Committee did not meet on October 4, 1999, and no one 
determined to grant the employees and officers options that day. Instead, on November 5,  1999, 
COMPLAINT 12 

when Juniper's stock price traded at $273.13, Berry created Stock Option Committee meeting 
minutes dated October 4, 1999, when Juniper's stock priced closed at $182.13 
-the lowest price of 
that quarter to date. Berry subsequently caused Juniper's board of directors to be falsely informed 
that the grant had been made on October 4,1999. More than $1 00 million 
in expenses associated 
with the in-the-money portion of this "evergreen7' grant were not disclosed by Juniper as a 
consequence of Berry's actions. 
57. On occasion, Juniper granted "pools" of stock options to certain business units to be 
awarded to employees based on the discretion of the business unit manager. Berry backdated "pool" 
grants Juniper made seven times between 2000 and 2003 (which also included certain grants to new 
hires). More than $200 million in expenses associated with the in-the-money portion of these "pool" 
grants were not disclosed by Juniper due to Berry's actions. 
58. For example, Juniper granted options to existing employees and senior executives (as 
well as some new hires) in one such "pool" grant, using the backdated grant date of December 21, 
2000. Juniper's stock price closed at $93.94 on December 21,2000, which was the lowest stock price 
of the six months up to that date. No Stock Option Committee meeting occurred on that date; in fact, 
Berry left the country early in the morning of December 21,2000. The grant was actually made in or 
around early January 2001, when Juniper's stock price was trading over $100 per share. 
59. 
In the spring of 2001, Juniper's stock price had declined substantially fi-om the levels 
experienced during 1999 and 2000. Consequently, many options awarded during those earlier years 
had strike prices well above the then-current stock price (known as "underwater7' options). 
60. 
In approximately April 2001, Juniper instituted a program to award additional options 
to existing employees using a formula based on the number of underwater options each employee 
then had, and the length of time each had been employed by Juniper. As part of the program, Juniper 
granted one block of this "formula" grant using as the grant date April 4,2001, when Juniper's stock 
price closed at $29.19. Berry caused the grant to be backdated to April 4, selecting that date with 
hndsight on or around April 19,2001, when Juniper's stock price had more than doubled to $65.58. 
61. Berry knew, or was reckless in not knowing, that the grant documentation that she 
helped prepare falsely represented the date on which stock options were actually granted to 
COMPLAINT 13 

employees. Berry further knew, or was reckless in not &owing, that using the stock option grant 
documentation that reflected the false information about the dates of the grants and exercise prices for 
the grants caused Juniper to fail to properly record expenses for these in-the-money grants. Berry 
further knew, or was reckless 
in not knowing, that the scheme rendered Juniper's public statements 
made in proxy statements dated April 13,2000, March 28,2001, April 11,2002 and March 28,2003, 
and 
in Forms 10-K filed with the Commission for fiscal years 1999 through 2002, that Juniper 
granted stock options at the fair market value on the date of the grant and that the company did not 
grant stock options for less than fair market value, materially false and misleading. 
c. Berry Caused Juniper to Falsely Report Its Financial Results 
62. 
As a public company, Juniper filed with the Comrnissio,n annual reports on Form 10-K 
that included the audited financial statements, certified by the companies' outside auditors, which 
falsely represented Juniper's financial results. Due to Juniper's failure to record an expense for 
in-
the-money options, Juniper's financial statements were materially misstated in each fiscal year fiom 
1999 through 2002, and Berry reviewed and discussed those Forms 10-K that contained these false 
representations, as Juniper's General Counsel. Berry's fiaud continued to affect the company's 
financial statements through 2005. 
63. 
For example, for its fiscal year 2001, Juniper originally reported a loss of $13.4 
million. However, after the company ultimately recorded a compensation expense for previously 
undisclosed in-the-money option grants in restated financials for this period, the company reported an 
additional expense of $513.1 million, which (after adjusting for taxes) brought Juniper's loss for the 
year to $50 1.5 million. 
64. 
Similarly, for its fiscal year 2003, Juniper originally reported net income of $39.2 
million, representing the company's first profitable year ever. As a result of Juniper's failure to 
record a compensation expense for backdated, in-the-money option grants, Juniper's pre-tax income 
was reduced by $19.3 million, which, after adjusting for taxes, reduced its net income to $30.7 
million for the year, a profit reduction of 21.68%. 
65. 
Juniper also publicly announced quarterly financial results, which were described in 
financial statements included in quarterly reports filed with the Commission on Forms 1 0-Q, that 
COMPLAINT 14 

were materially false and misleading due to Juniper's failure to record compensation expenses 
associated with in-the-money options. Thus, Juniper's quarterly reports filed on Forms 10-Q 
beginning with the quarter ended September 30, 1999, and for each of the company's first three 
quarters in fiscal years 2000 through 2002, and the first two quarters of fiscal year 2003, contained 
materially false and misleading financial statements. Berry reviewed and discussed, as Juniper's 
General Counsel, each of Juniper's Forms 10-Q that contained these false representations. 
66. 
Juniper filed with the Commission current reports on Forms 8-K on April 10,2003, 
July 10,2003 and October 9,2003, each of which included announcements about the company's 
financial results for prior quarters that were materially false and misleading due to Juniper's failure to 
record compensation expenses associated with undisclosed grants of in-the-money stock options. 
Berry reviewed, as Juniper's General Counsel, each of Juniper's Forms 8-K that contained these false 
representations. 
67. 
Dhing Berry's tenure as Juniper's General Counsel, Juniper filed with the 
Commission registration statements on Form S-8 on March 14,2000, August 18,2000, December 12, 
2000, March 29,200 1, December 2 1,200 
1 and July 9,2002, each of which incorporated by reference 
false and misleading periodic reports. Berry reviewed each of these registration statements filed on 
Form S-8. 
68. 
In May 2006, the audit committee of Juniper's board of director's began to investigate 
the Company's historical options granting practices. As a result of the audit committee investigation, 
Juniper announced in March 2007 restated financial results to record expenses for options granted to 
employees. Juniper announced the recording of additional pre-tax, non-cash, stock-based 
compensation expense of $894.7 million for fiscal years 1999 through 2005 under APB 25, $879.1 
million of which was for fiscal years 1999 through 2003. 
COMPLAINT 

C. 
Berry Received Backdated KLA and Juniper Options and Sold Shares 
69. 
While at KLA, Berry herself received backdated options purportedly granted on 
August 
31, 1998 that were in-the-money when granted. As a result, she personally benefited from the 
backdating and received unreported compensation from backdated KLA options. 
70. 
Similarly, while at Juniper, Beny also received backdated options purportedly granted 
on May 11,2000, December 21,2000, April 11,2001, July 1,2002 and March 12,2003 that were in- 
the-money when granted. As a result, she personally benefited from the backdating and received 
unreported compensation from backdated Juniper options. 
71. 
In addition, Beny exercised certain stock options she received. Berry further sold 
shares 
in each company's stock, including shares she received based on her exercise of stock options. 
Beny knew that she and other officers of KLA and Juniper similarly received options backdated 
as of 
the same dates 
as the backdated employee options. She thus was motivated to continue backdating 
options, in part, to enrich herself and her fellow officers at each company. 
FIRST CLAIM FOR RELIEF 

Violations of Exchange Act Section lo@) and Rule lob-5 Thereunder 

72. The Commission realleges and incorporates by reference paragraphs 1 through 71 
above. 
73. 
By engaging in the conduct described above, Berry, directly or indirectly, in 
connection with the purchase or sale of securities, by the use of means or instrumentalities of 
interstate commerce, or the mails, with scienter: 
a. 	Employed devices, schemes, or artifices to defraud; 
b. 	Made untrue statements of material facts or omitted to state material facts 
necessary 
in order to make the statements made, in the light of the circumstances 
under which they were made, not misleading; and 
c. 	Engaged in acts, practices, or courses of business which operated or would operate 
as a fkaud or deceit upon other persons, including purchasers and sellers of 
securities. 
COMPLAINT 

74. By reason of the foregoing, Berry has violated, and unless restrained and enjoined, will 
continue to violate Section 10(b) of the Exchange Act [15 U.S.C. 
5 78j(b)] and Rule lob-5 [17 C.F.R. 
5 240.1 Ob-51. 
SECOND CLAIM FOR RELIEF 
Aiding and Abetting Violations of Exchange Act Section 10(b) and Rule lob-5 Thereunder 
75. 
The Commission realleges and incorporates by reference paragraphs 1 through 71 
above. 
76. 
By engaging in the conduct described above, KLA, Juniper and/or other persons, 
directly or indirectly, in connection with the purchase or sale of securities, by the use of means or 
instrumentalities of interstate commerce, or the mails, with scienter: 
a. 	Employed devices, schemes, or artifices to defi-aud; 
b. 	Made untrue statements of material facts or omitted to state material facts 
necessary in order to make the statements made, in light of the circumstances 
under which they were made, not misleading; and 
c. 	Engaged in acts, practices, or courses of business which operated or would operate 
as a fi-aud or deceit upon other persons, including purchasers and sellers of 
securities. 
77. Berry knowingly provided substantial assistance to KLA's, Juniper's and/or other 
persons' violations of Section 10(b) of the Exchange Act [15 U.S.C. 
5 78j(b)] and Rule lob-5 [17 
C.F.R. 
5 240.10b-51, and therefore is liable as an aider and abettor pursuant to Section 20(e) of the 
Exchange Act [15 U.S.C. §78t(e)]. 
78. 
Unless restrained and enjoined, Berry will continue to violate and aid and abet 
violations of Section 10(b) of the Exchange Act [15 U.S.C. 
5 78j(b)] and Rule lob-5 [17 C.F.R. 5 
240.1Ob-51. 
THIRD CLAIM FOR RELIEF 
Violations of Securities Act Section 17(a)(l) 
79. The Commission realleges and incorporates by reference Paragraphs 1 through 71 
above. 

COMPLAINT 17 


80. By engaging in the conduct described above, Berry, directly or indirectly, in the offer 
or sale of securities, by use of the means or instruments of transportation or communication in 
interstate commerce or by use of the mails with scienter employed devices, schemes or artifices to 
defraud. 
81. 
By reason of the foregoing, Berry violated, and unless restrained and enjoined, will 
continue to commit violations of, Section 17(a)(l) of the Securities Act 115 U.S.C. 
§ 77q(a)]. 
FOURTH CLAIM FOR RELIEF 

Violations of Securities Act Sections 17(a)(2) and (3) 

82. 
The Commission realleges and incorporates by reference Paragraphs 1 through 71 
above. 
83. 
By engaging in the conduct described above, Berry, directly or indirectly, in the offer 
or sale of securities, by use of the means or instruments of transportation or communication in 
interstate commerce or by use of the mails: 
a. 	Obtained money or property by means of untrue statements of material fact or by 
omitting to state a material fact necessary in order to make the statements made, in 
light of the circumstances under which they were made, not misleading; and 
b. 	Engaged in transactions, practices, or courses of business which operated or would 
operate as a fraud or deceit upon the purchasers. 
84. 
By reason of the foregoing, Berry has violated, and unless restrained and enjoined, will 
continue to violate Sections 17(a)(2) and (3) of the Securities Act [15 U.S.C. 
$ 77q(a)(2) and (3)]. 
FIFTH CLAIM FOR RELIEF 
Aiding and Abetting Violations of Exchange Act Section 13(a) 
and Rules 12b-20,13a-1,13a-l1, and 13a-13 Thereunder 
85. The Commission realleges and incorporates by reference Paragraphs 1 through 71 
above. 
86. 
Based on the conduct alleged above, KLA and Juniper each violated Section 13(a) of 
the Exchange Act [15 U.S.C. 78m(a)] and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder [17 
C.F.R. 
$$ 240.12b-20,240.13a-1,240.13a-11 and 240.13a-131, which obligate issuers of securities 
COMPLAINT 18 

registered pursuant to Section 12 of the Exchange Act [15 U.S.C. $ 7811 to file with the Commission 
accurate annual, current and quarterly reports. 
87. 
By engaging in the conduct alleged above, Berry knowingly provided substantial 
assistance to KLA's and to Juniper's respective filing of materially false and misleading reports with 
the Commission. 
88. 
By reason of the foregoing, Berry aided and abetted violations by KLA and by Juniper 
of Section 13(a) of the Exchange Act [15 U.S.C. $78m(a)] and Rules 12b-20, 13a-1, 13a-11 and 13a- 
13 thereunder [17 
C.F.R. $$240.12b-20,240.13a-1,240.13a-11 and 240.13a-131. Unless restrained 
and enjoined, Berry will continue to aid and abet such violations. 
SIXTH CLAIM FOR RELIEF 

Aiding and Abetting Violations of Exchange Act Section 13(b)(2)(A) 

89. 
The Compission realleges and incorporates by reference Paragraphs 1 through 71 
above. 
90. 
Based on the conduct alleged above, KLA and Juniper each violated Section 
130>)(2)(A) of the Exchange Act 115 U.S.C. 
fj78m(b)(2)(A)], which obligates issuers of securities 
registered pursuant to Section 12 of the Exchange Act [15 U.S.C. 
$ 7811 to make and keep books, 
records and accounts which, in reasonable detail, accurately and fairly reflect the transactions and 
dispositions of the assets of the issuer. 
91. 
By engaging in the conduct alleged above, Berry knowingly provided substantial 
assistance to KLA's and Juniper's respective failures to make and keep books, records and accounts 
which, in reasonable detail, accurately and fairly reflect its transactions and dispositions of its assets. 
92. 
By reason of the foregoing, Berry has aided and abetted violations by KLA and by 
Juniper of Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. 
$ 78m(b)(2)(A)]. Unless restrained 
and enjoined, Berry will continue to aid and abet such violations. 
SEVENTH CLAIM FOR RELIEF 

Aiding and Abetting Violations of Exchange Act Section 13@)(2)@) 

93. 
The Commission realleges and incorporates by reference Paragraphs 1 through 71 
above. 

COMPLAINT 19 


94. 
Based on the conduct alleged above, KLA and Juniper violated Section 13@)(2)(B) of 
the Exchange Act [15 U.S.C. 
5 78m(b)(2)(B)], which obligates issuers of securities registered 
pursuant to Section 12 of the Exchange Act [15 U.S.C. 
5 7811 to devise and maintain a sufficient 
system of internal accounting controls. 
95. 
By engaging in the conduct alleged above, Berry knowlingly provided substantial 
assistance to KLA7s and Juniper's respective failures to devise and maintain a sufficient system of 
internal accounting controls. 
96. 
By reason of the foregoing, Berry has aided and abetted violations by KLA and by 
Juniper of Section 13(b)(2)(B) of the Exchange Act [15 U.S.C. 
5 78m(b)(2)(B)]. Unless restrained 
and enjoined, Berry will continue to aid and abet such violations. 
EIGHTH CLAIM FOR RELIEF 

Violations 
of Exchange Act Section 13(b)(5) 

97. 
The Commission realleges and incorporates by reference Paragraphs 1 through 71 
above. 
98. 
By the conduct alleged above, Berry violated Section 13@)(5) of the Exchange Act [15 
U.S.C. 5 78m(b)(5)], which prohibits anyone from knowingly circumventing a system of internal 
accounting, or knowingly 
falsifying certain books, records, and accounts. 
99. 
Unless restrained and enjoined, Berry will continue to violate Section 13@)(5) of the 
Exchange Act [15 U.S.C. 
5 78m@)(5)]. 
NINTH CLAIM FOR RELIEF 

Violations of Exchange Act Rule 
13b2-1 

100. The Commission realleges and incorporates by reference Paragraphs 1 through 71 
above. 
101. 
By engaging in the conduct described above, Berry falsified or caused to be falsified 
KLA's and Juniper's respective books, records and accounts in violation of Rule 13b2-1 under the 
Exchange Act [17 C.F.R. 
5 240.13b2-11. 
102. 
Berry has violated and, unless restrained and enjoined, will continue to violate, Rule 
13b2-1 under the Exchange Act [17 C.F.R. 
5 240.1 3b2011. 
COMPLAINT 20 

TENTH CLAIM FOR RELIEF 
Violations of Exchange Act Section 14(a) and Rule 14a-9 thereunder 
103. 
The Commission realleges and incorporates by reference Paragraphs 1 through 7 1 
above. 
104. 
Based on the conduct alleged above, KLA and Juniper each violated Section 14(a) of 
the Exchange Act [15 U.S.C. 
$ 78n(a)] and Rule 14a-9 thereunder [17 C.F.R. $ 240.14a-91, which 
prohibits solicitations by means of a proxy statement, form of proxy, notice of meeting or other 
communication, written or oral, that contain a statement which, at the time and in the light of the 
circumstances under which it was made, was false or misleading with respect to any material fact, or 
which omit to state any material fact necessary in order to make the statements therein not false or 
misleading or necessary to correct any statement in any earlier communication with respect to the 
solicitation of a proxy for the same meeting or subject matter which had become false or misleading. 
105. 
By engaging in the conduct alleged above, Berry knowingly provided substantial 
assistance to =A's and Juniper's respective solicitations by means of false or misleading proxy 
/
statements. 
106. 
By reason of the foregoing, Berry has aided and abetted violations by KLA and by 
Juniper of Section 14(a) of the Exchange Act [15 U.S.C. 
$ 78n(a)] and Rule 14a-9 thereunder [17 
C.F.R. 
$ 240.14a-91 thereunder. Unless restrained and enjoined, Berry will continue to aid and abet 
such violations. 
PRAYER FOR RELIEF 
WHEREFORE, the Commission respectfully requests that this Court: 
I. 
Permanently enjoin Berry fiom directly or indirectly violating Section 17(a) of the Securities 
Act [15 U.S.C. 
677q(a)] and Sections 10(b) and 13(b)(5) of the Exchange Act [15 U.S.C. $9 78j(b) 
and 78m(b)(5)], and Rules 10b-5 and 13b2-1 thereunder [17 C.F.R. 
$$ 240.10b-5 and 240.13b2-11, 
and fiom aiding and abetting violations of Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the 
Exchange Act [15 U.S.C. 
$8 78j(b), 78m(a), 78m(b)(2)(A), 78m(b)(2)(B) and 78n(a)] and Rules 12b- 
COMPLAINT 

20, 13a-1, 13a-11, 13a-13, and 14a-9 117 C.F.R. $$.240.12b-20,240.13a-1,240.13a-11,240.13a-13 
and 240.14a-91 thereunder; 
11. 
Order Berry to disgorge ill-gotten gains from conduct alleged herein, plus prejudgment 
interest; 
111. 
Order Berry to pay civil penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. 5 
77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 5 78u(d)(3)]; 
IV. 
Prohibit Berry, pursuant to Section 2 1 (d)(2) of the Exchange Act [15 U.S.C. 5 78u(d)(2)] 
from serving as an officer or director of any entity having a class of securities registered with the 
Commission pursuant to Section 12 of the Exchange Act [15 U.S.C. 
$ 784 or that is required to file 
reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. 
5 78o(d); 
v. 
Retain jurisdiction of this action in accordance with the principles of equity and the Federal 
Rules of Civil Procedure in order to implement and carry out the terms of all orders and decrees that 
may be entered, or to entertain any suitable application or motion for additional relief within the 
jurisdiction of this Court; and 
VI. 

Grant such other relief as this Court may deem just and appropriate. 
Respectfully submitted, 
Dated: August g2007 
Attorney for Plaintiff 
SECURITIES 
AND EXCHANGE COMMISSION 
COMPLAINT 

MARC J. FAGEL (Cal. Bar No. 154425) 

SUSAN F. LA MARCA (Cal. Bar No. 215231) 

[email protected] 


JUDITH L. ANDERSON (Cal. Bar No. 124281) 

[email protected] 


JEREMY E. PENDREY (Cal. Bar No. 187075) 

[email protected] 


ELENA RO (Cal. Bar No. 197308) 

[email protected] 


Attorneys for Plaintiff 

SECURITIES AND EXCHANGE COMMISSION 

44 Montgomery Street, Suite 2600 

San Francisco, California 941 04 

Telephone: (41 5) 705-2500 

Facsimile: (415) 705-2501 


UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN JOSE DIVISION 
.! 

, c; LJy 4431.1 
p, 
- <.A 

15 I1 SECURITIES AND EXCHANGE COMMISSION, I Civil Action No. 

Plaintiff, 

17 VS. 

18 LISA C. BERRY, 

l9 I1 Defendant. I 

1 Plaintiff Securities and Exchange Commission (the "Commission") alleges: 
21 

SUMMARY OF THE ACTION 
22 11 
23 / 

1. From 1997 through 2003, the in-house corporate attorney for two different public 11 
24 companies caused each of those companies to report false financial inlormation to the investing 

25 public by repeatedly backdating stock option grants and falsifying related paperwork. Defendant 11 
26 Lisa C. Berry devised the improper backdating scheme while serving as General Counsel of KLA- II 
27 Tencor Corporation ("KLA"), and then implemented similar practices after assuming the position of I1 
28 11 General Counsel for Juniper Networks, Inc. ("Juniper"). By facilitating the selection of fabricated 

COMPLAINT 1 

mailto:[email protected]
mailto:[email protected]
mailto:[email protected]
mailto:[email protected]


option grant dates, Berry caused KLA, and then Juniper, to conceal hundreds of millions of dollars 

of employee and executive compensation from investors. 

2. Under well-settled accounting principles in effect throughout the relevant period, KLA 

and Juniper were not required to record an expense in their financial statements for options granted to 

employees at the then-current market price of the company's stock ("at-the-money"), but were 

required to record expenses for any options granted below the current market price ("in-the-money"). 

To help KLA and Juniper attract and retain executives and employees with more valuable "in-the- 

money" options, without disclosing to shareholders the hundreds of millions of dollars in 

compensation expenses associated with those grants, Berry, working with others, established 

procedures to falsify the options grant records to make it appear that the options had been granted at- 

the-money. 

3. On repeated occasions fiom 1997 until she left KLA in 1999, Berry and others caused 

KL,A to backdate stock option grants to dates when KLA7s stock price closed much lower. Just prior 

to her departure from KLA, Berry provided "how to" instructions to other employees so that KLA 

could continue the improper backdating procedures. In 1999, when Berry moved to Juniper just 

before it became a public company, she immediately instituted similar backdating procedures. From 

mid-1999 through mid-2003, for dozens of different grants to groups of employees, Berry similarly 

caused Juniper to issue backdated options. 

4. By selecting option grant dates and prices with hindsight, Berry and others at the 

respective companies caused KLA, and then Juniper, to issue to executives and employees valuable 

in-the-money options without disclosing them, and further caused each company to materially 

misrepresent their publicly-reported income (or losses), and to falsely represent in public filings with 

the Commission that each company had no expenses related to their stock option grants. 

5 .  By engaging in the acts alleged in this Complaint, Berry, among other things, violated 

the antifraud provisions of the federal securities laws, falsified public companies7 books and records, 

and caused both KLA and Juniper to falsely report their financial results. The Commission seeks an 

order enjoining Berry from future violations of the securities laws, requiring her to disgorge ill-gotten 

COMPLAINT 2 



gains with prejudgment interest and to pay civil monetary penalties, barring Berry from serving as an 

officer or director of a public company, and providing other appropriate relief. 

JURISDICTION AND VENUE 

6. The Commission brings this action pursuant to Section 20@) and 20(d) of the 

Securities Act of 1933 ("Securities Act") [15 U.S.C. 5 77t@) and 77t(d)] and Sections 21(d) and 

21(e) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. $5 78u(d) and 78u(e)]. 

7. This Court has jurisdiction over this action pursuant to Sections 20@) and 22(a) of the 

Securities Act [15 U.S.C. 5 77t(b) and 77v(a)] and Sections 21(d), 21(e) and 27 of the Exchange Act 

[15 U.S.C. 5 78u(d), 78u(e) and 78aal. 

8. Berry, directly or indirectly, made use of the means or instrumentalities of interstate 

commerce, or of the mails, or of the facilities of a national securities exchange in connection with the 

transactions, acts, practices, and courses of business alleged herein. 

9. This Court is a proper venue for this action pursuant to Section 22 of the Securities 

Act [15 U.S.C. 5 77~1,and Section 27 of the Exchange Act [15 U.S.C. $77aa] because acts, 

transactions, practices, and courses of business constituting the violations alleged in this Complaint 

occurred within this District and Berry resides in the Northern District of California. 

INTRADISTRICT ASSIGNMENT 

10. Intradistrict assignment to the San Jose Division is proper pursuant to Civil Local Rule 

3-2(e) because acts or omissions giving rise to the Commission's claims occurred, among other 

places, in Santa Clara County, California. 

DEFENDANT 

11. Berry, age 49, resides in Los Gatos, California. From September 1996 through June 

1999, Berry was Vice President and General Counsel of KLA. From June 1999 to January 2004, 

Berry was General Counsel of Juniper, and beginning in July 1999, also served as Vice President and 

Secretary. Beny majored in accounting in college, received her juris doctorate and then obtained a 

masters of law in taxation. Berry is licensed to practice law in California, Arizona and Florida. 



RELEVANT ENTITIES 


12. KLA is a Delaware corporation headquartered in San Jose, Califomia that makes and 

sells systems for the semiconductor industry. At all relkvant times, KLA's common stock was 

registered with the Commission pursuant to Section 12 of the Exchange Act and traded on the 

NASDAQ National Market. At all times relevant to this action, KLA used a fiscal year ending on 

June 30. 

13. Juniper is a Delaware corporation headquartered in Sunnyvale, California that makes 

and sells internet-related networking products. From June 1999 through 2004, Juniper's common 

stock was registered under Section 12 of the Exchange Act and was traded on the NASDAQ National 

Market. At all times relevant to this action, Juniper used a fiscal year ending on December 3 1. 

FACTUAL ALLEGATIONS 

A. Berry and Others Backdated Options at KLA 

a. KLA's Stock Option Disclosures 

14. Throughout Berry's tenure as =A's General Counsel, KLA regularly used employee 

stock options as a form of compensation to recruit, retain, and incentivize key employees. Each 

option gave the grantee the right to buy KLA common stock from the company at a set price, called 

the "exercise" or "strike" price, on and after a fhture date. The option was "in-the-money" when 

granted if the market price of =A's common stock exceeded the option's exercise price. The option 

was "at-the-money" when granted if the market price of =A's common stock and the exercise price 

were the same. 

15. From approximately July 1997 through June 1999, KLA's primary stock option plan 

specifically prohibited the grant of in-the-money options to employees and executives. The plan 

required that the board of directors set the exercise price of the company's stock options, and that the 

price on the date of grant could not be less than fair market value - that is, the closing price of KLA's 

common stock on the date when granted. 

16. On August 7, 1998, KLA filed with the Commission a registration statement on Form 

S-8 which attached the Company's primary stock option plan, and incorporated each of these key 

terms. Berry reviewed this statement and signed it as the company's General Counsel. 

COMPLAINT 4 



17. KLA also publicly represented, in audited financial statements and other filings with 

the Commission made fkom 1997 through 1999, that its option grants were made at fair market value. 

In other words, KLA purported to issue options at-the-money, not in-the-money. 

18. KLA also stated in public filings that its audited financial statements conformed with 

generally accepted accounting principles (known as "GAAP"). In particular, KLA disclosed that it 

followed Accounting Principles Board's Opinion No. 25, "Accounting for Stock Issued to 

Employees" ("APB 25") in accounting for employee stock options. Under APB 25, public companies 

recorded an expense on their financial statements for the in-the-money portion of any options granted. 

Consequently, granting in-the-money options to employees could have a significant impact on the 

company's expenses and income (or loss) reported to the shareholders. APB 25 also allowed 

companies to grant employee stock options without recording any compensation expense, so long as 

the option exercise price was not below the closing market price for the company's stock on the date 

of the grant. 

19. KLA made the statements about its accounting for stock options in accordance with 

APB 25 in the notes to its audited financial statements, including in its annual reports to shareholders, 

filed with the Commission on Forms 10-K for its fiscal years 1998 and 1999. 

20. KLA also filed proxy statements that were sent to shareholders announcing the annual 

meeting of shareholders. In the proxy statements dated September 28, 1998 and October 15, 1999, 

K1;A provided information on executive compensation and executive option grants in the last fiscal 

year from the date of filing. The discussion on executive compensation in each proxy statement 

represented. that stock options were granted at the market price on the date of the grant. In addition, 

KLA's proxy statements filed on September 28, 1998 and October 15, 1999 stated that one of the 

material terms of certain grants to certain executives was that the exercise price of the options was the 

fair market value of the company's common stock as of the date of grant. These statements also were 

incorporated by reference into KLA's Forms 10-K. 

21. Berry reviewed, discussed, and finalized the company's annual reports filed with the 

Commission on Forms 10-K and its proxy statements filed with the Commission on September 28, 

1998 and October 15, 1999, as KLA's General Counsel. 

COMPLAINT 5 



b. Berry Participated in the Scheme to Backdate KLA Option Grants 

22. In 1997, KLA's board of directors delegated to a Stock Option Committee consisting 

of three directors the authority to grant stock options to non-officer employees. The board's 

delegation required that at least two members of the committee approve each options grant. 

23. From mid-1 997 through mid-1 999, Berry worked with KLA's Stock Option 

Committee, which consisted of board members with such delegated authority. Berry oversaw the 

administration of the stock option grant process. 

24. Under procedures put in place by Berry and the Stock Option Committee, the option 

grant approvals did not reflect the date the Stock Option Committee met to approve them. Instead, 

grants to employees by the Stock Option Committee were deliberately delayed to allow the selection 

of historically low stock prices with the benefit of hindsight. 

25. Berry directed Human Resources ("HR") and stock administration department 

employees to prepare the grant approval paperwork. Berry then directed the process for selecting the 

exercise price by using historical information regarding low KLA stock prices of the preceding 

weeks. One or more members of the Stock Option Committee then executed the grant paperwork 

prepared at Berry's direction, bearing false grant dates that had been selected using.hindsight. 

26. The grant approvals were then provided to HR and stock administration personnel who 

entered the grant information, including the backdated exercise prices, into KLA's options tracking 

database system. 

27. In this manner, Berry and others at KLA repeatedly backdated grants to newly hired 

and recently promoted employees ("new hire" grants), as well as to current employees eligible for 

options at the end of KLA's annual review process (known as "peak performance" or "focal" grants), 

among others. These backdated grants reflected historically low prices for KLA stock for the weeks 

prior to the date on which the price was selected. 

28. For example, KLA awarded several grants to employees bearing a purported grant date 

of August 3 1, 1998, at an exercise price equal to that day's closing stock price of $10.63. The grants 

included peak performance grants to officers and non-officers, as well as a new hire grant. However, 

these grants were actually made over a span of a couple weeks during October 1998, when KLA's 

COMPLAINT 6 



stock was trading between $10.75 and $13.81, and were backdated to August 3 1, 1998. The August 

3 1 stock price of $1 0.63 was the lowest closing price for =A's common stock for at least three 

months prior to October 1998. 

29. Berry personally benefited fiom the grant backdated to August 3 1, 1998, as she 

received options to purchase 22,000 shares at the lower $10.63 exercise price. 

30. In another example in late 1998, Berry and others at KLA backdated a one-time 

hundred-share grant made to thousands of KLA employees. The backdated grant used the date of 

October 19, 1998, and the closing stock price on that date of $27.6250 as the options' exercise price. 

However, Berry and others actually selected the price and prepared the grant during December 1998, 

by which time KLA's stock price had risen above $40. 

3 1. A KLA HR employee specifically questioned Berry about the propriety of backdating 

the grant to October 19, 1998. The employee pointed out to Berry that using the date in the past when 

the price was lower raised the question of "whether we would be able to pass the 'audit' test of not 

setting a date in the past in order to get a better price." Berry responded, acknowledging she 

understood, but nevertheless allowed KLA to use a backdated grant date and corresponding low price 

without appropriately accounting for the in-the-money option grant. 

32. On approximately ten occasions for grants backdated to July 3 1, 1997 through grants 

backdated to June 15, 1999, Berry and others thus used hindsight to choose option exercise prices for 

new hire, peak performancelfocal and other grants made to KLA employees and executives. 

33. Berry was involved in most facets of KLA's options granting process. Berry 

participated in conference calls and communications discussing accounting rules related to stock 

options. She also wrote a memorandum in November 1998 in which she acknowledged that repricing 

executive stock options by using an earlier grant date with a lower price would result in KLA having 

to take "a charge to its P&L." 

34. In June 1999, shortly before her departure fiom KLA, Berry instructed employees in 

KLA's HR department how to backdate stock option grants so that they could carry on with the 

scheme after she had departed. Berry advised the HR personnel to: (1) create a list of newly hired 

employees; (2) wait several weeks; (3) obtain a list of =A's daily closing stock prices for the past 

COMPLAINT 7 



several weeks; (4) highlight the three or four lowest prices; and (5) forward the new hire list and the 

highlighted stock price list to KLA's Stock Option Committee. As a consequence, KLA continued to 

backdate certain stock option grants in this manner following Berry's departure from the company. 

35. Berry knew, or was reckless in not knowing, that the grant documentation that she 

helped prepare falsely represented the date on which stock options were actually granted to 

employees. Berry further knew, or was reckless in not knowing, that the stock option grant 

documentation that reflected the false information about the dates of the grants and exercise prices for 

the grants, resulted in KLA's failure to properly record expenses for these in-the-money grants and 

rendered KLA7s public statements about its stock options grants false and misleading. 

c. KLA's Publicly Reported Financial Results 

36. As a public company, KLA filed with the Commission annual reports that included 

audited financial statements, certified by the companies7 outside auditors. =A's failure to record a 

compensation expense in connection with the backdated, in-the-money option grants resulted in 

materially overstated net income in KLA's financial statements throughout Berry's tenure at KLA, 

and even after she had left. Because the in-the-money options continued to affect the financial 

statements as employees became eligible to exercise their stock options, those misstatements 

continued through 2003. 

37. In particular, KLA's failure to record expenses related to stock options granted in-the- 

money resulted in a 4 percent overstatement of KLA7s net income in 1998, and a 46 percent 

overstatement of net income in 1999. KLA included those materially false representations about its 

financial results in its annual reports to shareholders filed with the Commission on Forms 10-K for its 

fiscal years 1998 and 1999. Berry reviewed and discussed =A's false and misleading annual reports 

(and drafts of those reports) filed with the Commission on Forms 10-K for the fiscal years 1998 and 

1999, as General Counsel of KLA. 

38. KLA also'filed quarterly reports with the Commission on Forms 10-Q that included 

financial statements for each of its first three fiscal quarters. =A's quarterly reports filed on Forms 

10-Q for each of the company's first three fiscal quarters of 1997 and 1998, and for the quarterly 

period ended March 3 1, 1999, contained materially false and misleading financial statements due to 

COMPLAINT 8 



the company's failure to record compensation expenses associated with granting undisclosed in-the- 

money options. Berry also reviewed, discussed, and helped finalize, each of these false and 

misleading Forms 1 0-Q, as General Counsel of KLA. 

39. KLA also sold securities pursuant to offering documents, including registration 

statements on Forms S-8 filed with the Commission on January 30, 1998, August 7, 1998 and 

December 4, 1998, which incorporated the false financial statements. Berry reviewed and prepared 

each of these false and misleading Forms S-8, as General Counsel of KLA. In addition, Berry signed 

the Forms S-8 filed with the Commission on January 30,1998 and August 7,1998. 

40. The representations to =A's shareholders in its public reports about the company's 

stock option program, including how KLA priced options and accounted for them and its financial 

results, were untrue. Berry knew, or was reckless in not knowing, that those statements and financial 

results were untrue, because she engineered with others and participated in the scheme to create 

option grant approvals that falsely represented the date of the grant to make it appear as though KLA 

was not required to record an expense for its backdated options. 

B. Berry Similarly Caused Juniper to Backdate Stock Option Grants 

41. On June 18, 1999, Berry became Juniper's General Counsel. In applying for the 

position, Berry held herself out as having experience in stock administration and the review of 

financial statements. 

a. Juniper's Stock Option Disclosures 

42. On June 24, 1999, Juniper became a public company through an initial public offering 

of its stock (an "IPO). Juniper grew rapidly following its IPO, hiring hundreds of employees 

through early June 2003. To support this rapid growth and to achieve its recruiting and compensation 

objectives, Juniper relied heavily on stock options as a recruiting and retention incentive. By 

compensating employees with stock options, Juniper avoided paying greater salaries or other forms of 

compensation that would have been necessary to attract and retain employees. Juniper granted stock 

options to nearly all new full-time employees. Juniper also granted options to existing Juniper 

employees (called "ongoing" options), based on performance or other factors. 

COMPLAINT 9 



43. Juniper publicly represented, in audited financial statements and other filings with the 

Commission made for or during its fiscal years 1999 through 2003, that its stock option grants were 

made at fair market value. In particular, Juniper stated in its annual reports to shareholders filed with 

the Commission on Forms 10-K for its fiscal years 1999 through 2002: "Incentive stock options are 

granted at an exercise price of not less than the fair value per share of the common stock on the date 

of grant." Juniper further stated in each of those reports on Forms 10-K that, although the company's 

plans allowed for the granting of so-called "nonstatutory" stock options at an exercise price of not 

less than 85 percent of the then-market value, "no nonstatutory stock options have been granted for 

less than fair market value on the date of the grant." 

44. Juniper's public filings also affirmatively stated that the company accounted for its 

employee stock option plans in accordance with GAAP, and particularly, that the company followed 

APB 25. Thus, in each of its Forms 10-K filed with the Commission for fiscal years 1999 through 

2002, Juniper represented that it had "elected to follow APB 25," and that "[blecause the exercise 

price of the Company's stock options equals the market price of the underlying stock on the date of 

grant, no compensation expense is recognized." 

45. Juniper also sent to shareholders proxy statements announcing its annual meetings of 

shareholders for 2000 through 2003, filed with the Commission on April 13,2000, March 28,2001, 

April 11,2002 and March 28,2003. The proxy statements for 2000,2001 and 2003, in describing 

executive compensation and particularly options granted to officers, represented that "options are 

granted at fair market value on the date of grant." Similarly, the 2002 proxy statement, in responding 

to a shareholder proposal regarding the company's repricing (or regranting) of stock options, 

represented that employees at Juniper who have been awarded stock options "have a right to purchase 

stock in the future at a price which is the fair market value on the date of the stock option grant." 

46. Berry reviewed Juniper's annual reports filed on Forms 10-K, and other periodic 

reports filed with the Commission, while she was Juniper's General Counsel. Berry was also 

responsible for drafting Juniper's proxy statements announcing annual meetings of shareholder, 

which she signed as Juniper's General Counsel. 

COMPLAINT 10 



b. Berry's Scheme to Backdate Juniper Option Grants 

47. On July 21, 1999, based on Berry's recommendation, Juniper's Board of Directors 

created a three-member Stock Option Committee, to which it delegated authority to grant stock 

options to Juniper's non-executive employees. Throughout her tenure with Juniper, Berry served as a 

member of the Stock Option Committee, along with two other persons, Juniper's chief executive 

officer and chief financial officer. 

48. Berry was responsible for overseeing Juniper's stock option granting process, 

including supervising Juniper's stock administrator. From mid-1999 through mid-2003, Berry used 

the procedures she put in place for most Juniper stock option grants by backdating the grants to a date 

in the past when Juniper's closing stock price was lower. Berry then routinely created backdated 

"minutes" for purported Stock Option Committee meetings that never occurred. 

i. Berry Backdated New Hire Stock Option Grants 

49. Beginning in the second half of 1999, Berry routinely prepared backdated stock option 

grants to issue options to recently hired employees of Juniper. For these new hire grants, B e n .  

collected the names of recently hired employees and had lists prepared. She then selected as the 

exercise price of the new hire grants the closing price of Juniper's stock on a date in the past, 

reflecting the low closing price during a particular period around the time the employees were hired. 

For each backdated grant fiom 1999 through 2003, Berry then created Stock Option Committee 

meeting "minutes" that falsely represented that the Stock Option Committee had met on the date of 

the low closing price and granted options on that date. 

50. Berry signed the backdated committee "minutes" as a Stock Option Committee 

member. In addition, for each backdated grant she either presented the minutes to the other Stock 

Option Committee members for signature or stamped the minutes with a signature stamp she 

maintained bearing the other Stock Option Committee members' signatures. 

5 1. Once Berry selected a backdated grant date and a corresponding exercise price, she 

informed Juniper's stock administrator, who then entered the grants into Juniper's stock option 

tracking software using the backdated date as the grant date. Juniper did not reflect in its books an 

sxpense related to the in-the-money portion of the options. 

COMPLAINT 11 



52. For example, Juniper granted options to six new Juniper employees on the purported, 

but false, grant date of October 27, 1999. The six employees were hired on Monday, October 25, 

1999, at which time Juniper's stock traded at $257.75. Juniper's stock price dipped to a low of 

$249.94 on Wednesday, October 27, then rose to $275.63 by the end of the week. Berry actually 

selected the grant date in mid-November 1999, when Juniper's stock was trading around $283.50, 

using information about Juniper's historical closing prices for its stock during the week the 

employees were hired. 

53. Similarly, Juniper granted stock options to employees hired between October 8,2002 

through January 2,2003, using the backdated January 2,2003 closing price of $7.36 as the purported 

"fair market value" of the stock on the grant date. The Stock Option Committee never met on 

January 2,2003. Instead, Berry selected that date during mid-February, when Juniper's stock was 

trading around $9 per share. The January 2,2003 closing price for Juniper's stock, $7.36, used as the 

exercise price, was Juniper's lowest closing price of the year up to the time Berry selected the grant 

date. 

54. Using dates selected with hindsight between mid-June 1999 through the end of May 

2003, Berry backdated more than 50 grants to groups of new employees. More than $300 million in 

expenses associated with the in-the-money portion of those grants were not disclosed by Juniper as a 

consequence of Berry's scheme. 

ii. Berry Backdated Juniper's "Ongoing" Stock Option Grants 

55. From her arrival in 1999 through mid-2003, Berry also backdated performance-related 

grants to existing employees and officers, which Juniper called "ongoing" grants. Berry thus 

backdated large grants to officers and employees that were made to create retention and performance 

incentives (and which at times included new hires), on approximately nine occasions throughout her 

tenure. 

56. For instance, Juniper granted options to a large group of existing employees and 

officers (and to certain new hires), which it called an "evergreen" grant, using the backdated grant 

date of October 4, 1999. The Stock Option Committee did not meet on October 4, 1999, and no one 

determined to grant the employees and officers options that day. Instead, on November 5, 1999, 

COMPLAINT 12 

http:$257.75
http:$283.50


when Juniper's stock price traded at $273.13, Berry created Stock Option Committee meeting 

minutes dated October 4, 1999, when Juniper's stock priced closed at $182.13 - the lowest price of 

that quarter to date. Berry subsequently caused Juniper's board of directors to be falsely informed 

that the grant had been made on October 4,1999. More than $1 00 million in expenses associated 

with the in-the-money portion of this "evergreen7' grant were not disclosed by Juniper as a 

consequence of Berry's actions. 

57. On occasion, Juniper granted "pools" of stock options to certain business units to be 

awarded to employees based on the discretion of the business unit manager. Berry backdated "pool" 

grants Juniper made seven times between 2000 and 2003 (which also included certain grants to new 

hires). More than $200 million in expenses associated with the in-the-money portion of these "pool" 

grants were not disclosed by Juniper due to Berry's actions. 

58. For example, Juniper granted options to existing employees and senior executives (as 

well as some new hires) in one such "pool" grant, using the backdated grant date of December 21, 

2000. Juniper's stock price closed at $93.94 on December 21,2000, which was the lowest stock price 

of the six months up to that date. No Stock Option Committee meeting occurred on that date; in fact, 

Berry left the country early in the morning of December 21,2000. The grant was actually made in or 

around early January 2001, when Juniper's stock price was trading over $100 per share. 

59. In the spring of 2001, Juniper's stock price had declined substantially fi-om the levels 

experienced during 1999 and 2000. Consequently, many options awarded during those earlier years 

had strike prices well above the then-current stock price (known as "underwater7' options). 

60. In approximately April 2001, Juniper instituted a program to award additional options 

to existing employees using a formula based on the number of underwater options each employee 

then had, and the length of time each had been employed by Juniper. As part of the program, Juniper 

granted one block of this "formula" grant using as the grant date April 4,2001, when Juniper's stock 

price closed at $29.19. Berry caused the grant to be backdated to April 4, selecting that date with 

hndsight on or around April 19,2001, when Juniper's stock price had more than doubled to $65.58. 

61. Berry knew, or was reckless in not knowing, that the grant documentation that she 

helped prepare falsely represented the date on which stock options were actually granted to 

COMPLAINT 13 

http:$273.13


employees. Berry further knew, or was reckless in not &owing, that using the stock option grant 

documentation that reflected the false information about the dates of the grants and exercise prices for 

the grants caused Juniper to fail to properly record expenses for these in-the-money grants. Berry 

further knew, or was reckless in not knowing, that the scheme rendered Juniper's public statements 

made in proxy statements dated April 13,2000, March 28,2001, April 11,2002 and March 28,2003, 

and in Forms 10-K filed with the Commission for fiscal years 1999 through 2002, that Juniper 

granted stock options at the fair market value on the date of the grant and that the company did not 

grant stock options for less than fair market value, materially false and misleading. 

c. Berry Caused Juniper to Falsely Report Its Financial Results 

62. As a public company, Juniper filed with the Comrnissio,n annual reports on Form 10-K 

that included the audited financial statements, certified by the companies' outside auditors, which 

falsely represented Juniper's financial results. Due to Juniper's failure to record an expense for in-

the-money options, Juniper's financial statements were materially misstated in each fiscal year fiom 

1999 through 2002, and Berry reviewed and discussed those Forms 10-K that contained these false 

representations, as Juniper's General Counsel. Berry's fiaud continued to affect the company's 

financial statements through 2005. 

63. For example, for its fiscal year 2001, Juniper originally reported a loss of $13.4 

million. However, after the company ultimately recorded a compensation expense for previously 

undisclosed in-the-money option grants in restated financials for this period, the company reported an 

additional expense of $513.1 million, which (after adjusting for taxes) brought Juniper's loss for the 

year to $50 1.5 million. 

64. Similarly, for its fiscal year 2003, Juniper originally reported net income of $39.2 

million, representing the company's first profitable year ever. As a result of Juniper's failure to 

record a compensation expense for backdated, in-the-money option grants, Juniper's pre-tax income 

was reduced by $19.3 million, which, after adjusting for taxes, reduced its net income to $30.7 

million for the year, a profit reduction of 21.68%. 

65. Juniper also publicly announced quarterly financial results, which were described in 

financial statements included in quarterly reports filed with the Commission on Forms 1 0-Q, that 

COMPLAINT 14 



were materially false and misleading due to Juniper's failure to record compensation expenses 

associated with in-the-money options. Thus, Juniper's quarterly reports filed on Forms 10-Q 

beginning with the quarter ended September 30, 1999, and for each of the company's first three 

quarters in fiscal years 2000 through 2002, and the first two quarters of fiscal year 2003, contained 

materially false and misleading financial statements. Berry reviewed and discussed, as Juniper's 

General Counsel, each of Juniper's Forms 10-Q that contained these false representations. 

66. Juniper filed with the Commission current reports on Forms 8-K on April 10,2003, 

July 10,2003 and October 9,2003, each of which included announcements about the company's 

financial results for prior quarters that were materially false and misleading due to Juniper's failure to 

record compensation expenses associated with undisclosed grants of in-the-money stock options. 

Berry reviewed, as Juniper's General Counsel, each of Juniper's Forms 8-K that contained these false 

representations. 

67. Dhing Berry's tenure as Juniper's General Counsel, Juniper filed with the 

Commission registration statements on Form S-8 on March 14,2000, August 18,2000, December 12, 

2000, March 29,200 1, December 2 1,200 1 and July 9,2002, each of which incorporated by reference 

false and misleading periodic reports. Berry reviewed each of these registration statements filed on 

Form S-8. 

68. In May 2006, the audit committee of Juniper's board of director's began to investigate 

the Company's historical options granting practices. As a result of the audit committee investigation, 

Juniper announced in March 2007 restated financial results to record expenses for options granted to 

employees. Juniper announced the recording of additional pre-tax, non-cash, stock-based 

compensation expense of $894.7 million for fiscal years 1999 through 2005 under APB 25, $879.1 

million of which was for fiscal years 1999 through 2003. 

COMPLAINT 



C. Berry Received Backdated KLA and Juniper Options and Sold Shares 

69. While at KLA, Berry herself received backdated options purportedly granted on 

August 31, 1998 that were in-the-money when granted. As a result, she personally benefited from the 

backdating and received unreported compensation from backdated KLA options. 

70. Similarly, while at Juniper, Beny also received backdated options purportedly granted 

on May 11,2000, December 21,2000, April 11,2001, July 1,2002 and March 12,2003 that were in- 

the-money when granted. As a result, she personally benefited from the backdating and received 

unreported compensation from backdated Juniper options. 

71. In addition, Beny exercised certain stock options she received. Berry further sold 

shares in each company's stock, including shares she received based on her exercise of stock options. 

Beny knew that she and other officers of KLA and Juniper similarly received options backdated as of 

the same dates as the backdated employee options. She thus was motivated to continue backdating 

options, in part, to enrich herself and her fellow officers at each company. 

FIRST CLAIM FOR RELIEF 


Violations of Exchange Act Section lo@) and Rule lob-5 Thereunder 


72. The Commission realleges and incorporates by reference paragraphs 1 through 71 

above. 

73. By engaging in the conduct described above, Berry, directly or indirectly, in 

connection with the purchase or sale of securities, by the use of means or instrumentalities of 

interstate commerce, or the mails, with scienter: 

a. 	 Employed devices, schemes, or artifices to defraud; 

b. 	 Made untrue statements of material facts or omitted to state material facts 

necessary in order to make the statements made, in the light of the circumstances 

under which they were made, not misleading; and 

c. 	 Engaged in acts, practices, or courses of business which operated or would operate 

as a fkaud or deceit upon other persons, including purchasers and sellers of 

securities. 

COMPLAINT 



74. By reason of the foregoing, Berry has violated, and unless restrained and enjoined, will 

continue to violate Section 10(b) of the Exchange Act [15 U.S.C. 5 78j(b)] and Rule lob-5 [17 C.F.R. 

5 240.1 Ob-51. 

SECOND CLAIM FOR RELIEF 

Aiding and Abetting Violations of Exchange Act Section 10(b) and Rule lob-5 Thereunder 

75. The Commission realleges and incorporates by reference paragraphs 1 through 71 

above. 

76. By engaging in the conduct described above, KLA, Juniper and/or other persons, 

directly or indirectly, in connection with the purchase or sale of securities, by the use of means or 

instrumentalities of interstate commerce, or the mails, with scienter: 

a. 	 Employed devices, schemes, or artifices to defi-aud; 

b. 	 Made untrue statements of material facts or omitted to state material facts 

necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading; and 

c. 	 Engaged in acts, practices, or courses of business which operated or would operate 

as a fi-aud or deceit upon other persons, including purchasers and sellers of 

securities. 

77. Berry knowingly provided substantial assistance to KLA's, Juniper's and/or other 

persons' violations of Section 10(b) of the Exchange Act [15 U.S.C. 5 78j(b)] and Rule lob-5 [17 

C.F.R. 5 240.10b-51, and therefore is liable as an aider and abettor pursuant to Section 20(e) of the 

Exchange Act [15 U.S.C. §78t(e)]. 

78. Unless restrained and enjoined, Berry will continue to violate and aid and abet 

violations of Section 10(b) of the Exchange Act [15 U.S.C. 5 78j(b)] and Rule lob-5 [17 C.F.R. 5 

240.1Ob-51. 

THIRD CLAIM FOR RELIEF 

Violations of Securities Act Section 17(a)(l) 

79. The Commission realleges and incorporates by reference Paragraphs 1 through 71 

above. 


COMPLAINT 17 




80. By engaging in the conduct described above, Berry, directly or indirectly, in the offer 

or sale of securities, by use of the means or instruments of transportation or communication in 

interstate commerce or by use of the mails with scienter employed devices, schemes or artifices to 

defraud. 

81. By reason of the foregoing, Berry violated, and unless restrained and enjoined, will 

continue to commit violations of, Section 17(a)(l) of the Securities Act 115 U.S.C. § 77q(a)]. 

FOURTH CLAIM FOR RELIEF 


Violations of Securities Act Sections 17(a)(2) and (3) 


82. The Commission realleges and incorporates by reference Paragraphs 1 through 71 

above. 

83. By engaging in the conduct described above, Berry, directly or indirectly, in the offer 

or sale of securities, by use of the means or instruments of transportation or communication in 

interstate commerce or by use of the mails: 

a. 	 Obtained money or property by means of untrue statements of material fact or by 

omitting to state a material fact necessary in order to make the statements made, in 

light of the circumstances under which they were made, not misleading; and 

b. 	 Engaged in transactions, practices, or courses of business which operated or would 

operate as a fraud or deceit upon the purchasers. 

84. By reason of the foregoing, Berry has violated, and unless restrained and enjoined, will 

continue to violate Sections 17(a)(2) and (3) of the Securities Act [15 U.S.C. $ 77q(a)(2) and (3)]. 

FIFTH CLAIM FOR RELIEF 

Aiding and Abetting Violations of Exchange Act Section 13(a) 
and Rules 12b-20,13a-1,13a-l1, and 13a-13 Thereunder 

85. The Commission realleges and incorporates by reference Paragraphs 1 through 71 

above. 

86. Based on the conduct alleged above, KLA and Juniper each violated Section 13(a) of 

the Exchange Act [15 U.S.C. 78m(a)] and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder [17 

C.F.R. $$ 240.12b-20,240.13a-1,240.13a-11 and 240.13a-131, which obligate issuers of securities 

COMPLAINT 18 



registered pursuant to Section 12 of the Exchange Act [15 U.S.C. $ 7811 to file with the Commission 

accurate annual, current and quarterly reports. 

87. By engaging in the conduct alleged above, Berry knowingly provided substantial 

assistance to KLA's and to Juniper's respective filing of materially false and misleading reports with 

the Commission. 

88. By reason of the foregoing, Berry aided and abetted violations by KLA and by Juniper 

of Section 13(a) of the Exchange Act [15 U.S.C. $78m(a)] and Rules 12b-20, 13a-1, 13a-11 and 13a- 

13 thereunder [17 C.F.R. $$240.12b-20,240.13a-1,240.13a-11 and 240.13a-131. Unless restrained 

and enjoined, Berry will continue to aid and abet such violations. 

SIXTH CLAIM FOR RELIEF 


Aiding and Abetting Violations of Exchange Act Section 13(b)(2)(A) 


89. The Compission realleges and incorporates by reference Paragraphs 1 through 71 

above. 

90. Based on the conduct alleged above, KLA and Juniper each violated Section 

130>)(2)(A) of the Exchange Act 115 U.S.C. fj78m(b)(2)(A)], which obligates issuers of securities 

registered pursuant to Section 12 of the Exchange Act [15 U.S.C. $ 7811 to make and keep books, 

records and accounts which, in reasonable detail, accurately and fairly reflect the transactions and 

dispositions of the assets of the issuer. 

91. By engaging in the conduct alleged above, Berry knowingly provided substantial 

assistance to KLA's and Juniper's respective failures to make and keep books, records and accounts 

which, in reasonable detail, accurately and fairly reflect its transactions and dispositions of its assets. 

92. By reason of the foregoing, Berry has aided and abetted violations by KLA and by 

Juniper of Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. $ 78m(b)(2)(A)]. Unless restrained 

and enjoined, Berry will continue to aid and abet such violations. 

SEVENTH CLAIM FOR RELIEF 


Aiding and Abetting Violations of Exchange Act Section 13@)(2)@) 


93. The Commission realleges and incorporates by reference Paragraphs 1 through 71 

above. 


COMPLAINT 19 




94. Based on the conduct alleged above, KLA and Juniper violated Section 13@)(2)(B) of 

the Exchange Act [15 U.S.C. 5 78m(b)(2)(B)], which obligates issuers of securities registered 

pursuant to Section 12 of the Exchange Act [15 U.S.C. 5 7811 to devise and maintain a sufficient 

system of internal accounting controls. 

95. By engaging in the conduct alleged above, Berry knowlingly provided substantial 

assistance to KLA7s and Juniper's respective failures to devise and maintain a sufficient system of 

internal accounting controls. 

96. By reason of the foregoing, Berry has aided and abetted violations by KLA and by 

Juniper of Section 13(b)(2)(B) of the Exchange Act [15 U.S.C. 5 78m(b)(2)(B)]. Unless restrained 

and enjoined, Berry will continue to aid and abet such violations. 

EIGHTH CLAIM FOR RELIEF 


Violations of Exchange Act Section 13(b)(5) 


97. The Commission realleges and incorporates by reference Paragraphs 1 through 71 

above. 

98. By the conduct alleged above, Berry violated Section 13@)(5) of the Exchange Act [15 

U.S.C. 5 78m(b)(5)], which prohibits anyone from knowingly circumventing a system of internal 

accounting, or knowingly falsifying certain books, records, and accounts. 

99. Unless restrained and enjoined, Berry will continue to violate Section 13@)(5) of the 

Exchange Act [15 U.S.C. 5 78m@)(5)]. 

NINTH CLAIM FOR RELIEF 


Violations of Exchange Act Rule 13b2-1 


100. The Commission realleges and incorporates by reference Paragraphs 1 through 71 

above. 

101. By engaging in the conduct described above, Berry falsified or caused to be falsified 

KLA's and Juniper's respective books, records and accounts in violation of Rule 13b2-1 under the 

Exchange Act [17 C.F.R. 5 240.13b2-11. 

102. Berry has violated and, unless restrained and enjoined, will continue to violate, Rule 

13b2-1 under the Exchange Act [17 C.F.R. 5 240.1 3b2011. 

COMPLAINT 20 

mailto:78m@)(5)]TENTH CLAIM FOR RELIEF 

Violations of Exchange Act Section 14(a) and Rule 14a-9 thereunder 

103. The Commission realleges and incorporates by reference Paragraphs 1 through 7 1 

above. 

104. Based on the conduct alleged above, KLA and Juniper each violated Section 14(a) of 

the Exchange Act [15 U.S.C. $ 78n(a)] and Rule 14a-9 thereunder [17 C.F.R. $ 240.14a-91, which 

prohibits solicitations by means of a proxy statement, form of proxy, notice of meeting or other 

communication, written or oral, that contain a statement which, at the time and in the light of the 

circumstances under which it was made, was false or misleading with respect to any material fact, or 

which omit to state any material fact necessary in order to make the statements therein not false or 

misleading or necessary to correct any statement in any earlier communication with respect to the 

solicitation of a proxy for the same meeting or subject matter which had become false or misleading. 

105. By engaging in the conduct alleged above, Berry knowingly provided substantial 

assistance to =A's and Juniper's respective solicitations by means of false or misleading proxy 
/

statements. 

106. By reason of the foregoing, Berry has aided and abetted violations by KLA and by 

Juniper of Section 14(a) of the Exchange Act [15 U.S.C. $ 78n(a)] and Rule 14a-9 thereunder [17 

C.F.R. $ 240.14a-91 thereunder. Unless restrained and enjoined, Berry will continue to aid and abet 

such violations. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court: 

I. 

Permanently enjoin Berry fiom directly or indirectly violating Section 17(a) of the Securities 

Act [15 U.S.C. 677q(a)] and Sections 10(b) and 13(b)(5) of the Exchange Act [15 U.S.C. $9 78j(b) 

and 78m(b)(5)], and Rules 10b-5 and 13b2-1 thereunder [17 C.F.R. $$ 240.10b-5 and 240.13b2-11, 

and fiom aiding and abetting violations of Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the 

Exchange Act [15 U.S.C. $8 78j(b), 78m(a), 78m(b)(2)(A), 78m(b)(2)(B) and 78n(a)] and Rules 12b- 

COMPLAINT 



20, 13a-1, 13a-11, 13a-13, and 14a-9 117 C.F.R. $$.240.12b-20,240.13a-1,240.13a-11,240.13a-13 

and 240.14a-91 thereunder; 

11. 

Order Berry to disgorge ill-gotten gains from conduct alleged herein, plus prejudgment 

interest; 

111. 

Order Berry to pay civil penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. 5 

77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 5 78u(d)(3)]; 

IV. 

Prohibit Berry, pursuant to Section 2 1 (d)(2) of the Exchange Act [15 U.S.C. 5 78u(d)(2)] 

from serving as an officer or director of any entity having a class of securities registered with the 

Commission pursuant to Section 12 of the Exchange Act [15 U.S.C. $ 784 or that is required to file 

reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. 5 78o(d); 

v .  

Retain jurisdiction of this action in accordance with the principles of equity and the Federal 

Rules of Civil Procedure in order to implement and carry out the terms of all orders and decrees that 

may be entered, or to entertain any suitable application or motion for additional relief within the 

jurisdiction of this Court; and 

VI. 


Grant such other relief as this Court may deem just and appropriate. 

Respectfully submitted, 

Dated: August g 2 0 0 7  

Attorney for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 

COMPLAINT