A major investor in Computer Associates International Inc. is seeking to reopen a class action settlement to force former executives to return
hundreds of millions of dollars in ill-gotten gains.
The investor, Ranger Governance Ltd., is headed by Texas billionaire Sam Wyly. In 2001, he led a public fight to oust a majority of the CA board, which Wyly alleged turned a blind eye toward bookkeeping irregularities.
According to Newsday, Ranger officials asked the software developer to join Ranger in a motion to overturn the $144-million shareholder settlement. The agreement calls for the distribution of 5.7 million CA shares to injured stockholders and a release of liability for CA and its former and current executives.
Wyly alleges the settlement was reached under false pretenses because CA's former general counsel, Steve Woghin, produced “vital documents” for internal investigators only after the settlement was approved.
Calling the settlement "a pittance of what was ripped off,” Ranger officials want former executives Charles Wang and Sanjay Kumar to return personal profits gained from stock sales.
"These former executives made money from the market, pumping that stock price up. It's the shareholders that got ripped off," said Bill Brewer, the Dallas-based lead attorney for Wyly and Ranger. "Those market losses are what the class action should have gotten back. Instead it got none of that."
Brewer said CA is being asked to join the motion to determine whether it is a “new day at CA.” He asked: "Are these really people who feel like they were duped and are now compelled to help right the wrongs?"
CA officials said in a statement that CA is working to recover money from the former executives by working with federal prosecutors. "CA believes the government is in the best position to obtain disgorgement from wrongdoers. We will provide the government with active assistance, including accounting and legal support."
The statement also noted that a recent settlement with federal authorities includes an additional $225 million in restitution to shareholders "for losses caused by the misconduct of certain former company executives."
Since Wyly's proxy fight led to public awareness of shoddy accounting practices at CA, Brewer said Wyly wants to continue cleaning up CA. "Wyly was at the front edge of this fight and was more right than he knew in 2001."