A jury has found Computer Associates International (CA) liable for violating the "best price rule" in connection with the software maker's acquisition of On-Line Software -- a purchase that occurred over nine years ago.
The Thursday decision relating to a class-action lawsuit came out of the U.S. District Court for the Eastern District of New York in Brooklyn and was announced in a statement by the plaintiffs' law firm Kirby McInerney & Squire LLP.
The Brooklyn jury determined that CA violated the Williams Act provisions of the U.S. Securities Exchange Act of 1934 and the U.S. Securities and Exchange Commission's implementing regulations in connection with the acquisition. According to the jury, CA breached the "best price rule" by paying greater consideration per share for the holdings of one On-Line shareholder than was received by all other investors. Under the terms of the rule, all shareholders in a tender offer should receive the best price offered to any other shareholder.
The plaintiffs' firm said that the jury's verdict should translate into a judgement of US$6 million in favor of the plaintiffs, excluding interest.
This is not the first time this year CA has lost out against shareholders.
In April, the software vendor said it would settle litigation filed against it by shareholders who claimed that the vendor gave executives excessive compensation packages. The company top dogs in question were Charles Wang, CA chairman and chief executive officer, Sanjay Kumar, president and chief operating officer, and Russell Artzt, cofounder and executive vice president of research and development. Since that time, Kumar has taken over the CA CEO role from Wang.
CA said earlier this year that the compensation received by its top executives stemmed from a reward for a $17.4 billion surge in the vendor's financial performance. [See "CA Agrees to Settle Compensation Litigation," April 3]Shareholders filed the lawsuit in June of 1998.