Activist investor Sam Wyly could be causing yet another stir at Computer Associates, which has been the target of an investigation by the Securities and Exchange Commission and Department of Justice for more than two years.
Ranger Governance Ltd, an investment group led by Wyly, a Texas investor, sent a letter to Computer Associates International saying that Ranger might sue former and current CA executives for $1 billion, according to Reuters.
In a letter faxed to Kenneth Cron, CA’s interim chief executive and obtained by the wire service, Ranger’s lawyer William Brewer said the group is considering a lawsuit against former chief executives Charles Wang and Sanjay Kumar, former CFO Ira Zar, and former global sales head Stephen Richards, as well as Russell Artzt, a current executive vice president for research and development and board member.
Those executives “received performance-based compensation based on artificially inflated earnings,” the letter reportedly said. Brewer said he had not heard back from Cron yet, according to the wire service, which said that CA declined to comment on the matter.
Wyly became a major shareholder of the embattled software giant after selling Sterling Software Inc. to CA in 2000. In the ensuing two years, he launched two proxy fights in an attempt to replace several CA board members.
After the second proxy fight in 2002, the company paid him $10 million in greenmail to drop the proxy fight and not launch another battle for five years.
Brewer said Ranger, not Wyly as an individual, was mulling the new suit, according to Reuters. Ranger has a small investment in CA’s shares. “The money goes to Computer Associates, which will indirectly benefit shareholders,” Brewer told Reuters.