Former Computer Associates International Inc. (CA) Chief Executive Sanjay Kumar (search) pleaded not guilty Thursday to charges of securities fraud and obstruction of justice stemming from a two-year investigation into accounting fraud at the software company.

Kumar's arraignment in U.S. District Court in Brooklyn, N.Y., came a day after the company agreed to pay $225 million to past and current shareholders to settle charges the company improperly booked $2.2 billion in revenue.

Stephen Richards, the former global head of sales for the company, also pleaded not guilty to fraud and obstructioneys Wednesday and said he expects to be exonerated.

A U.S. district court judge Wednesday approved an agreement that allows the company to avoid prosecution if it pays a fine and puts a number of remedial policies in place within 18 months.

Shares of Computer Associates were up $1.67, or 6.6 percent, to $26.97 on the New York Stock Exchange (search).