Computer Associates 2009 Annual Report Download - page 98

ERISA action). The individual defendants were released from any potential claim by or on behalf of the Company relating
to the same matters.
On October 5, 2004 and December 9, 2004, four purported Company stockholders served motions to vacate the Order
of Final Judgment and Dismissal entered by the Federal Court in December 2003 in connection with the settlement of
the derivative action. These motions primarily sought to void the releases that were granted to the individual defendants
under the settlement. On December 7, 2004, a motion to vacate the Order of Final Judgment and Dismissal entered by
the Federal Court in December 2003 in connection with the settlement of the 1998 and 2002 stockholder lawsuits
discussed above (together with the October 5, 2004 and December 9, 2004 motions, the 60(b) Motions) was filed by
Sam Wyly and certain related parties (the Wyly Litigants). The motion sought to reopen the settlement to permit the
moving stockholders to pursue individual claims against certain present and former officers of the Company. The motion
stated that the moving stockholders did not seek to file claims against the Company.
Derivative Actions Filed in 2004
In June and July 2004, three purported derivative actions were filed in the Federal Court by Ranger Governance, Ltd.
(Ranger), Bert Vladimir and Irving Rosenzweig against certain current or former employees and/or directors of the
Company (the Derivative Actions). In November 2004, the Federal Court issued an order consolidating the 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, McWade, Schwartz, de Vogel, Grasso, Pieper,
Artzt, D’Amato, and Ranieri, Stephen Richards, Steven Woghin, David Kaplan, David Rivard, Lloyd Silverstein, Michael A.
McElroy, Gary Fernandes, Robert E. La Blanc, Jay W. Lorsch, Kenneth Cron, Walter P. Schuetze, KPMG LLP, and Ernst &
Young LLP. The Company is named as a nominal defendant. The Consolidated Complaint seeks from one or more of the
defendants (1) 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-
Background”), (2) compensatory and consequential damages in an amount not less than $500 million in connection
with the investigations giving rise to the Deferred Prosecution Agreement (DPA) entered into between the Company
and the United States Attorney’s Office (USAO) in 2004 and a consent to enter into a final judgment (Consent
Judgment) in a parallel proceeding brought by the Securities and Exchange Commission (SEC) regarding certain of the
Company’s past accounting practices, including its revenue recognition policies and procedures during certain periods
prior to the adoption of the Company’s new business model in October 2000. (In May 2007, based upon the Company’s
compliance with the terms of the DPA, the Federal Court ordered dismissal of the charges that had been filed against
the Company in connection with the DPA, and the DPA expired. The injunctive provisions of the Consent Judgment
permanently enjoining the Company from violating certain provisions of the federal securities laws remain in effect.),
(3) unspecified relief 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, (4) relief for alleged breach of fiduciary duty,
(5) unspecified compensatory, consequential and punitive damages based upon allegations of corporate waste and
fraud, (6) unspecified damages for breach of duty of reasonable care, (7) restitution and rescission of the compensation
earned under the Company’s executive compensation plan and (8) pursuant to Section 304 of the Sarbanes-Oxley Act,
reimbursement of bonus or other incentive-based equity compensation and alleged profits realized from sales of
securities issued by 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, Ernst & Young LLP and KPMG LLP in an amount totaling not less than
$500 million.
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 Derivative Actions 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 the 60(b) Motions. The Special Litigation Committee also served a motion which seeks to
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