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SEC Files Securities Fraud Charges Against Computer
Associates International, Inc., Former CEO Sanjay
Kumar, and Two Other Former Company Executives
FOR IMMEDIATE RELEASE
Company Agrees to Settlement with SEC and Justice Department
Including $225 Million in Restitution and Corporate Governance
Washington, D.C., Sept. 22, 2004
— The Securities and Exchange
Commission today announced securities fraud charges against Computer
Associates International, Inc. and three of the company's former top
executives — Sanjay Kumar, former CEO and Chairman, Stephen Richards,
former Head of Sales, and Steven Woghin, former General Counsel. The
SEC alleges that from 1998 to 2000, Computer Associates routinely kept its
books open to record revenue from contracts executed after the quarter
ended in order to meet Wall Street quarterly earnings estimates.
Computer Associates prematurely recognized $2.2 billion in revenue in
FY2000 and FY2001 and more than $1.1 billion in premature revenue in
prior quarters. In addition, Computer Associates, through former executives
Kumar, Richards and Woghin and others, obstructed the SEC's investigation
into the company's accounting practices.
Computer Associates has agreed to settlements with the SEC and the
Justice Department in which the company will pay $225 million in
restitution to shareholders and will make reforms to its corporate
governance and financial accounting controls.
Woghin has agreed in a
partial settlement to a permanent injunction and officer and director bar
with monetary sanctions to be decided at a later point.
Mark K. Schonfeld, Director of the SEC's Northeast Regional Office, said,
"Like a team that plays on after the final whistle has blown, Computer
Associates kept scoring until it had all the points it needed to make every
quarter look like a win.
With these charges we have demonstrated our
commitment to hold the highest levels of management responsible for fraud
on the company's shareholders."
Alexander M. Vasilescu, Senior Trial Counsel in the SEC's Northeast
Regional Office, added, "The combined actions of the SEC and the Justice
Department, including the $225 million in restitution, should send a clear
message that public companies will pay a heavy price for obstructing the
The SEC's complaints, filed in the United States District Court for the
Eastern District of New York, allege as follows: