Computer Associates 2007 Annual Report Download - page 122

Title 18, United States Code, Section 371. On June 21, 2006, Mr. Bennett pled guilty to one count of conspiracy to obstruct
justice. On December 6, 2006, Mr. Bennett was sentenced to a term of home confinement for ten months, three years of
supervised release, 100 hours of community service, and a fine of $15,000.
Derivative Actions Filed in 2004
In June 2004, a purported derivative action was filed in the Federal Court by Ranger Governance Ltd. against certain current or
former employees and/or directors of the Company. In July 2004, two additional purported derivative actions were filed in the
Federal Court by purported Company stockholders against certain current or former employees and/or directors of the
Company. In November 2004, the Federal Court issued an order consolidating these three derivative actions. The plaintiffs
filed a consolidated amended complaint (the Consolidated Complaint) on January 7, 2005. The Consolidated Complaint
names as defendants Messrs. Wang, Kumar, Zar, Artzt, D’Amato, Richards, Ranieri and Woghin; Messrs. Kaplan, Rivard and
Silverstein; Michael A. McElroy; Messrs McWade and Schwartz; Gary Fernandes; Robert E. La Blanc; Jay W. Lorsch; Kenneth
Cron; Walter P. Schuetze; Messrs. de Vogel and Grasso; Roel Pieper; KPMG LLP; and Ernst & Young LLP. The Company is
named as a nominal defendant.The Consolidated Complaint alleges a claim against Messrs.Wang, Kumar, Zar, Kaplan, Rivard,
Silverstein, Artzt, D’Amato, Richards, McElroy, McWade, Schwartz, Fernandes, La Blanc, Ranieri, Lorsch, Cron, Schuetze, de
Vogel, Grasso, Pieper and Woghin for contribution towards the consideration the Company had previously agreed to provide
current and former stockholders in settlement of certain class action litigation commenced against the Company and certain
officers and directors in 1998 and 2002 (see “— Stockholder Class Action and Derivative Lawsuits Filed Prior to 2004”) and
seeks on behalf of the Company compensatory and consequential damages in an amount not less than $500 million in
connection with the USAO and SEC investigations (see “— The Government Investigation”).The Consolidated Complaint also
alleges a claim seeking unspecified relief against Messrs. Wang, Kumar, Zar, Kaplan, Rivard, Silverstein, Artzt, D’Amato,
Richards, McElroy, McWade, Fernandes, La Blanc, Ranieri, Lorsch, Cron, Schuetze, de Vogel and Woghin for violations of
Section 14(a) of the Exchange Act for alleged false and material misstatements made in the Company’s proxy statements
issued in 2002 and 2003. The Consolidated Complaint also alleges breach of fiduciary duty by Messrs. Wang, Kumar, Zar,
Kaplan, Rivard, Silverstein, Artzt, D’Amato, Richards, McElroy, McWade, Schwartz, Fernandes, La Blanc, Ranieri, Lorsch, Cron,
Schuetze, de Vogel, Grasso, Pieper and Woghin. The Consolidated Complaint also seeks unspecified compensatory,
consequential and punitive damages against Messrs. Wang, Kumar, Zar, Kaplan, Rivard, Silverstein, Artzt, D’Amato,
Richards, McElroy, McWade, Schwartz, Fernandes, La Blanc, Ranieri, Lorsch, Cron, Schuetze, de Vogel, Grasso, Pieper
and Woghin based upon allegations of corporate waste and fraud. The Consolidated Complaint also seeks unspecified
damages against Ernst & Young LLP and KPMG LLP, for breach of fiduciary duty and the duty of reasonable care, as well as
contribution and indemnity under Section 14(a) of the Exchange Act. The Consolidated Complaint requests restitution and
rescission of the compensation earned under the Company’s executive compensation plan by Messrs. Artzt, Kumar, Richards,
Zar, Woghin, Kaplan, Rivard, Silverstein, Wang, McElroy, McWade and Schwartz. Additionally, pursuant to Section 304 of the
Sarbanes-Oxley Act, the Consolidated Complaint seeks reimbursement of bonus or other incentive-based equity
compensation received by defendants Wang, Kumar, Schwartz and Zar, as well as alleged profits realized from their sale
of securities issued by the Company during the time periods they served as the Chief Executive Officer (Messrs. Wang and
Kumar) and Chief Financial Officer (Messrs. Schwartz and Zar) of the Company. Although no relief is sought from the
Company, the Consolidated Complaint seeks monetary damages, both compensatory and consequential, from the other
defendants, including current or former employees and/or directors of the Company, KPMG LLP and Ernst & Young LLP in an
amount totaling not less than $500 million.
The consolidated derivative action has been stayed pending resolution of the 60(b) Motions (see “— Stockholder Class Action
and Derivative Lawsuits Filed Prior to 2004”).
On February 1, 2005, the Company established a Special Litigation Committee of independent members of its Board of
Directors to, among other things, control and determine the Company’s response to the Consolidated Complaint and the
60(b) Motions. On April 13, 2007, the Special Litigation Committee issued its reports, which announced the Special Litigation
Committee’s conclusions, determinations, recommendations and actions with respect to the claims asserted in the Derivative
Actions and in the 60(b) Motions. Also, in response to the Consolidated Complaint, the Special Litigation Committee served a
motion which seeks the Federal Court’s approval of the Special Litigation Committee’s conclusions. As summarized in the
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