Not satisfied that stiff fines, executive indictments and a deal with the government to settle fraud charges have cured what ails Computer Associates International Inc., a group of critical investors continues to pressure the company for restitution and answers.
Officials of major CA stockholder Ranger Governance Ltd., led by Texas billionaire Sam Wyly, want to reopen a class action settlement reached last year by CA and its top executives. In an interview with eWEEK last week, Ranger officials said the settlement, which resulted in a $100 million stock issue to shareholders and a release of liability for CA management, was based on fraudulent information.
According to officials, Ranger is drafting a formal letter to ask CA to join it in a motion to overturn the settlement and force former executives, including Charles Wang and Sanjay Kumar, to return hundreds of millions of dollars in personal profits gained from stock transactions.
"These former executives made money from the market, pumping that stock price up. Its the shareholders that got ripped off," said Bill Brewer, partner at Bickel & Brewer and the lead attorney for Wyly and Ranger, in Dallas. "Those market losses are what the class action should have gotten back. Instead it got none of that."
Brewer called the $100 million settlement "a pittance of what was ripped off. If these [former executives] had come forward and confessed the truth back then, nobody would have granted them the release."
Brewer said the Islandia, N.Y., software developer is being asked to join the legal action "as a way of determining whether we are really seeing a new day at CA."
"Are these really people who feel like they were duped and are now compelled to help right the wrongs?" Brewer asked. "Do they go for some measure of justice for shareholders? Well take our answer as we see it from them."
The effort to overturn the class action settlement is separate from a derivative suit that Wyly filed this summer in New York federal district court looking to get more than $1 billion in salaries and bonuses paid to current and former CA executives returned to the companys treasury. Ranger approached CAs interim CEO, Kenneth Cron, about joining that suit as well, but the CA hierarchy was "unfortunately hostile, argumentative and dismissive of our position," Brewer said.
"Part of the reason they now give for that unfavorable position is because they had been lied to themselves," Brewer said. "If thats true, they should join with us now in pursuing all ill-gotten gains."