As the SEC and other law enforcement agencies investigate whether executives and companies committed crimes by backdating stock options, the list of Silicon Valley companies under investigation looks like a client list of one firm: Wilson Sonsini.

Actually, that's something of an overstatement: Sonsini represents just under half of the Valley companies under investigation, according to a
NY Times profile of Larry Sonsini, described as the Valley's "most feared and sought-after
lawyer," (reporter Gary Rivlin), "the most powerful person in Silicon
Valley," (investment banker Sanford Robertson), a better deal-maker than lawyer, and a great lawyer.

While Sonsini was untouched during the dot-bomb meltdown and accounting scandals of a few years back, the current spreading scandal may be enough to tarnish Sonsini's untouchable reputation, Rivlin suggests. Specifically, what liability if any does Sonsini have for his advice to ex-Brodade CEO Gregory Reynes? Wilson Sonsini served as outside counsel to Brocade and Sonsini sat on Brocade's board until last year.

Prosecutors have accused [Reyes]
of defrauding not only investors but also its board by doctoring
documents, including board minutes. ... [P]rosecutors, questioned at a news
conference, said that they had not ruled out the possibility that Mr.
Sonsini could be charged at a later date."

Back in February, Reyes lashed out at Sonsini in a Business Week article.

Reyes says Sonsini urged the board to make Reyes a "committee of one" to dole out options as he wished in 1999. The next he heard from the board, he claims, was after a disgruntled former employee threatened to file a whistleblower suit in 2004 alleging improprieties related to options.

After an investigation, Reyes says Sonsini persuaded him to resign because the evidence pointing to him was "overwhelming and conclusive." Only after Reyes had seen the evidence and, unimpressed, tried to rescind his resignation did Sonsini reveal that Brocade's outside auditor had refused to certify Brocade's financials with Reyes as CEO, says Reyes. His argument: that members of the board overstated his role in order to deflect the auditor's attention from themselves.

Sonsini offered the Times this non-denial denial: ""I'm not so sure the committee-of-one didn't exist before
becoming counsel to Brocade."

At Spot-On, Chris Nolan sees the Brocade investigation as signs that the SEC is dealing proactively with Bubble 2.0 even as it prosecutes on 1.0.

The U.S. government - finally! - means business when it comes to how Silicon Valley conducts its affairs. For Bubble 2.0 the valley is going to have to join the real world, you know the one with real, regulator oversight, non-partisan legal advice and objective accounting? That real world, the one in which the rest of American businesses are located.

... Remember, the government regulates white collar crime by example. That's why they're stepping in now - they can see Bubble 2.0 as clearly as the rest of us. And while much of what Silicon Valley will say in response to the investigations, the investigators, the scandals, the indictment and the possible convictions may well be true - it doesn't matter. This is how regulation is enforced and laws are interpreted.