NEW YORK – A group led by Texas investor Sam Wyly (search) has filed a lawsuit seeking to recoup more than $1 billion from former and current executives of Computer Associates International Inc. (CA), which has been dogged by a long-running criminal probe of its accounting methods.
The lawsuit, brought by Wyly's Ranger Governance Ltd. (search) on behalf of CA, names 10 former and two current executives at the software company, including former chief executives Charles Wang (search) and Sanjay Kumar (search).
The suit, filed Tuesday in U.S. District Court in Brooklyn, New York, seeks money the plaintiffs claim was paid to CA executives based on erroneous financial reporting.
Ranger's lawyer said any damages awarded, minus litigation costs, would be returned to the company,
"We are not trying recover anything from Computer Associates," said the attorney, William Brewer. "We are trying to recover money for them."
Wyly, who accepted $10 million from CA in exchange for refraining from launching any proxy fights for five years, is using his investment group to sue the executives in an effort to boost CA's stock price, according to a person close to the matter.
Wyly became a major CA shareholder after selling his company to CA. He owns about 3 million CA options, most of which are worthless at the current stock price.
CA's stock has been depressed by two federal investigations into its accounting methods. The company this year restated $2.2 billion in revenue from previous years.
Four former executives have pleaded guilty this year to charges, including securities fraud and obstruction, and more than 15 executives have been pushed out of the company due to the investigation.
Brewer said Computer Associates has not responded to a letter it wrote June 7 to CA's interim CEO, Ken Cron, about the lawsuit, nor have they heard from any defendants. The suit could last 15 months to two years, he said.
A CA spokesman said the company is continuing to review the matter of compensation given or due to the individuals subject to the government investigation. An attorney for Kumar and a Wang spokesman were not immediately available.
Wyly became a major shareholder of the Long Island, New York-based software maker after he sold Sterling Software Inc. to CA in 2000. In the following two years, Wyly launched two proxy fights, seeking to replace certain board members. The company paid him $10 million in 2002 to abandon a proxy fight and not launch any more proxy fights for five years.
Computer Associates shares were up 38 cents at $28.02 in midday trade on the New York Stock Exchange.