Court Appoints Attorney Lee S. Richards Independent Examiner for Computer Associates International, Inc.
Computer Associates International, Inc. agreed to a $225 million SEC settlement and a $100 million criminal fine under a deferred prosecution agreement after being exposed for multi-year accounting fraud involving improper software revenue recognition, leading a court to appoint attorney Lee S. Richards as Independent Examiner for at least 18 months to oversee compliance and reform.
Computer Associates International, Inc. resolved charges of widespread accounting fraud by consenting to a $225 million SEC civil settlement and a $100 million criminal fine under a Deferred Prosecution Agreement (DPA) with the U.S. Attorney’s Office for the Eastern District of New York. The fraud centered on manipulating software licensing revenue through backdating and improper booking practices to inflate earnings over multiple years, violating securities laws and misleading investors. To ensure compliance, U.S. District Judge I. Leo Glasser appointed attorney Lee S. Richards as Independent Examiner for at least 18 months to audit and recommend reforms in revenue recognition, internal controls, ethics policies, and IT systems, with quarterly and final reports required to the court, SEC, DOJ, and the company’s board.
Computer Associates International, Inc. resolved federal charges of multi-year accounting fraud by consenting to a $225 million civil settlement with the SEC and a $100 million criminal fine under a Deferred Prosecution Agreement (DPA) with the U.S. Attorney’s Office for the Eastern District of New York in September 2004. The fraud involved systematically manipulating software licensing revenue through backdating and improper revenue recognition practices to inflate earnings, misleading investors and violating securities laws. To ensure corporate reform and compliance, U.S. District Judge I. Leo Glasser appointed attorney Lee S. Richards as Independent Examiner for at least 18 months, granting him authority to evaluate key areas including revenue recognition policies, internal accounting controls, ethics and compliance programs, the adequacy of the Internal Audit Department, and the implementation of a new enterprise resource planning (ERP) system. Richards was required to issue quarterly reports to the SEC, DOJ, the company’s Board of Directors, and the Court, and to deliver a final report detailing the extent of the company’s adherence to the Final Judgment and DPA. His role included making recommendations for best practices, subject to review and implementation by the company’s board in consultation with regulators. The DPA allowed Computer Associates to avoid criminal prosecution contingent on full compliance with the oversight regime. This case marked one of the most significant corporate fraud settlements of the early 2000s and underscored the SEC’s and DOJ’s use of independent examiners as a tool for corporate governance reform.
Extracted insights
- company Computer Associates
- person deferred prosecution agreement
- person final judgment
- person final report
- person independent examiner
- person judge glasser
- person judge i. leo glasser
- person lee s. richards
- person quarterly reports
- company richards spears kibbe & orbe llp
- Judge I. Leo Glasser Issued an Order Appointing Attorney Lee S. Richards
- Judge Glasser Appointed Lee S. Richards
- Computer Associates Consented to Final Judgment
- Computer Associates Entered into Deferred Prosecution Agreement
- Lee S. Richards Will Serve as Independent Examiner
- Lee S. Richards Will Examine Computer Associates' Compliance
- Lee S. Richards Will Make Recommendations to Board of Directors
- Lee S. Richards Will Issue Quarterly Reports
- Lee S. Richards Will Prepare Final Report
- Lee S. Richards Is a Partner in Richards Spears Kibbe & Orbe LLP
COURT APPOINTS ATTORNEY LEE S. RICHARDS INDEPENDENT EXAMINER FOR COMPUTER ASSOCIATES INTERNATIONAL, INC. FOR IMMEDIATE RELEASE 2005-37 Washington, D.C., March 16, 2005 - The Securities and Exchange Commission today announced that United States District Court Judge I. Leo Glasser has issued an order appointing attorney Lee S. Richards to act as Independent Examiner for Computer Associates International, Inc. Judge Glasser appointed Mr. Richards pursuant to the Final Judgment in the SEC's civil action that Computer Associates consented to on Sept. 21, 2004, and also pursuant to the Deferred Prosecution Agreement (DPA) that Computer Associates entered into with the United States Attorney for the Eastern District of New York (USAO) on Sept. 22, 2004. Mr. Richards will serve as Independent Examiner for at least eighteen months. In that role, Mr. Richards will, among other things, examine Computer Associates' compliance with the terms and conditions of the Final Judgment and DPA; make recommendations to Computer Associates' Board of Directors for review and implementation, after consultation with the SEC and USAO, regarding best practices in the specified areas; issue quarterly reports to the SEC and USAO, and Computer Associates' Board of Directors; and, at the conclusion of his term, prepare and deliver to the Court, SEC, USAO, and Board of Directors a Final Report describing the extent of Computer Associates' compliance with the Final Judgment, DPA and order appointing Mr. Richards. The "best practices" at Computer Associates that Mr. Richards will examine, as listed in the Final Judgment and DPA, include (1) practices for recognition of software licensing revenue; (2) internal accounting controls; (3) implementation of a new "enterprise resource planning" information technology system; (4) the adequacy of the Internal Audit Department; (5) ethics and compliance policies; and (6) management policies and procedures. Mr. Richards is a partner in the New York law firm of Richards Spears Kibbe & Orbe LLP. For further information contact: Mark K. Schonfeld (646) 428-1650 Regional Director, Northeast Regional Office Andrew M. Calamari (646) 428-1659 Associate Regional Director, Northeast Regional Office Alexander M. Vasilescu (646) 428-1928 Senior Trial Counsel, Northeast Regional Office http://www.sec.gov/news/press/2005-37.htm Home | Previous Page Modified: 03/16/2005
COURT APPOINTS ATTORNEY LEE S. RICHARDS INDEPENDENT EXAMINER FOR COMPUTER ASSOCIATES INTERNATIONAL, INC. FOR IMMEDIATE RELEASE 2005-37 Washington, D.C., March 16, 2005 - The Securities and Exchange Commission today announced that United States District Court Judge I. Leo Glasser has issued an order appointing attorney Lee S. Richards to act as Independent Examiner for Computer Associates International, Inc. Judge Glasser appointed Mr. Richards pursuant to the Final Judgment in the SEC's civil action that Computer Associates consented to on Sept. 21, 2004, and also pursuant to the Deferred Prosecution Agreement (DPA) that Computer Associates entered into with the United States Attorney for the Eastern District of New York (USAO) on Sept. 22, 2004. Mr. Richards will serve as Independent Examiner for at least eighteen months. In that role, Mr. Richards will, among other things, examine Computer Associates' compliance with the terms and conditions of the Final Judgment and DPA; make recommendations to Computer Associates' Board of Directors for review and implementation, after consultation with the SEC and USAO, regarding best practices in the specified areas; issue quarterly reports to the SEC and USAO, and Computer Associates' Board of Directors; and, at the conclusion of his term, prepare and deliver to the Court, SEC, USAO, and Board of Directors a Final Report describing the extent of Computer Associates' compliance with the Final Judgment, DPA and order appointing Mr. Richards. The "best practices" at Computer Associates that Mr. Richards will examine, as listed in the Final Judgment and DPA, include (1) practices for recognition of software licensing revenue; (2) internal accounting controls; (3) implementation of a new "enterprise resource planning" information technology system; (4) the adequacy of the Internal Audit Department; (5) ethics and compliance policies; and (6) management policies and procedures. Mr. Richards is a partner in the New York law firm of Richards Spears Kibbe & Orbe LLP. For further information contact: Mark K. Schonfeld (646) 428-1650 Regional Director, Northeast Regional Office Andrew M. Calamari (646) 428-1659 Associate Regional Director, Northeast Regional Office Alexander M. Vasilescu (646) 428-1928 Senior Trial Counsel, Northeast Regional Office http://www.sec.gov/news/press/2005-37.htm Home | Previous Page Modified: 03/16/2005