The SEC lawsuit against Greg Brady was a 2005 civil enforcement action accusing the former i2 Technologies president and CEO of participating in a revenue-recognition fraud that misstated roughly $1 billion in software license revenue. Brady settled in February 2007 without admitting or denying the allegations, paying $8,300,344 and accepting a five-year ban from serving as an officer or director of any public company.1SEC.gov. SEC v. Gregory A. Brady, et al., Litigation Release No. 20005
What the SEC Accused Brady Of
The SEC filed suit in July 2005 in the U.S. District Court for the Northern District of Texas, naming Brady alongside former i2 CFO William M. Beecher and former sales executive Reagan L. Lancaster.2SEC.gov. SEC v. Gregory A. Brady, et al., Litigation Release No. 19306 Brady had been i2’s president since May 1999 and was promoted to CEO in May 2001 before resigning in April 2002.
The agency alleged that Brady participated in the fraudulent revenue-recognition scheme, signed public filings containing misstated financial statements, provided false representation letters to i2’s outside auditors, and approved earnings releases with materially false information. The SEC also accused him of insider trading, alleging he sold i2 stock based on material nonpublic information while the share price was artificially inflated by the misstatements.1SEC.gov. SEC v. Gregory A. Brady, et al., Litigation Release No. 200053SEC.gov. SEC Complaint, Civil Action No. 3:05-CV-1416-D
The defendants moved to dismiss. In May 2006 the court denied those motions and let the case proceed.4GovInfo. SEC v. Brady, Civil Action No. 3:05-CV-1416-D, Court Opinion
The Underlying i2 Fraud
i2 Technologies was a Dallas-based supply chain software company. The SEC alleged that over the four years ending December 31, 2001, and the first three quarters of 2002, the company misstated approximately $1 billion in software license revenue, more than $125 million of which should never have been recognized at all.2SEC.gov. SEC v. Gregory A. Brady, et al., Litigation Release No. 19306
The heart of the scheme was booking revenue for software that was non-functional, not yet built, or required substantial customization before it could be delivered. Internally, some of those products were referred to as “vaporware.” According to the SEC complaint, i2 executives instructed salespeople to sell products that did not yet exist, then recognized the revenue immediately rather than deferring it as accounting rules required.3SEC.gov. SEC Complaint, Civil Action No. 3:05-CV-1416-D The company also concealed the nature of reciprocal barter transactions, including a $10 million deal with an Enron subsidiary in which i2 simultaneously purchased $10 million in services so it could recognize license revenue.2SEC.gov. SEC v. Gregory A. Brady, et al., Litigation Release No. 19306
i2 announced the results of a six-month internal audit in July 2003 and restated its earnings for 1999 through 2002. The restatement cut cumulative revenue by $359.7 million and increased the company’s net loss by $207.1 million.5CNET. i2 Restates Four Years of Earnings Revenue fell by $130.9 million for 1999, $477 million for 2000, and $137.6 million for 2001, partially offset by a $385.8 million increase for 2002 as deferred revenue was reclassified.6SEC.gov. SEC Administrative Proceeding No. 33-8428
Terms of Brady’s Settlement
Brady settled on February 15, 2007. Without admitting or denying the allegations, he consented to pay $8,300,344 in total: $5,529,362 in disgorgement, $2,270,982 in prejudgment interest, and a $500,000 civil penalty, all due within ten business days.7SEC.gov. Agreed Final Judgment, SEC v. Brady
He also accepted a five-year bar from serving as an officer or director of any public company and was permanently enjoined from future violations of the antifraud, reporting, and internal-controls provisions of federal securities law.1SEC.gov. SEC v. Gregory A. Brady, et al., Litigation Release No. 20005
How Brady’s Deal Compared to the Co-Defendants
Lancaster settled first, in March 2006, consenting to pay $1,172,355 in disgorgement and prejudgment interest plus a $120,000 civil penalty.8SEC.gov. SEC v. Gregory A. Brady, et al., Litigation Release No. 19624
Beecher, the former CFO, settled in October 2006 for more than $2.1 million: roughly $1.9 million in disgorgement and prejudgment interest and a $250,000 civil penalty. He accepted the same five-year officer-and-director bar Brady would later take.9CFO.com. Former i2 CFO to Pay $2.1M to SEC
Brady’s payment was several times larger than either co-defendant’s, reflecting his position as the most senior executive named. The company itself had already settled with the SEC in June 2004, paying a $10 million civil penalty and nominal disgorgement of $1 without admitting or denying the findings.10SEC.gov. SEC Press Release 2006-11
What the Ban Did and Did Not Prevent
The five-year bar applied only to public companies. Brady had founded One Network Enterprises, a privately held Dallas supply chain technology firm, in 2002, the same year he resigned from i2, and the settlement did not stop him from running it.11Dallas Innovates. Dallas One Network Enterprises Acquired for $839M by Blue Yonder He served as its CEO from 2002 to 2021, then continued as chairman. Blue Yonder acquired One Network in a deal that closed on August 2, 2024, for approximately $839 million.12Supply Chain Digital. Inside Blue Yonder’s Acquisition of One Network Enterprises