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Judge taps CA watchdog

Manhattan lawyer Lee Richards picked as firm's independent examiner, as part of Computer Associates' agreement

BY ROBERT E. KESSLER AND MARK HARRINGTON
STAFF WRITERS

March 17, 2005

A former federal prosecutor has been named to ensure that Computer Associates cleans up its operation in line with a court agreement that headed off a federal criminal indictment of the firm for fraud.

Lee Richards, a Manhattan attorney, was selected yesterday to be the firm's independent examiner by U.S. District Court Judge I. Leo Glasser, officials said.

In addition to being a former federal prosecutor in the Southern District who investigated insider trading and securities fraud cases, Richards also has worked for the Securities and Exchange Commission overseeing the compliance or liquidation of several securities firms.

U.S. Attorney Roslynn Mauskopf said, "One of the primary purposes of [the CA agreement] was to ensure that, going forward, CA meets the highest standards for accounting, internal compliance, corporate governance and ethics. ... Lee Richards will be bringing his wealth of experience and judgment to helping ensure that those purposes are achieved."

In private practice recently, Richards most notably served as the attorney for Salomon Smith Barney telecom analyst Jack Grubman. Grubman, described by research firm The Corporate Library as a "poster boy for Wall Street conflicts of interest and shady dealings," was banned from the business for life and fined $15 million. Grubman, however, neither admitted nor denied the charges against him.

In a statement, Computer Associates said the firm "is committed to fulfilling all the requirements of the [agreement] and has already made important progress. With Mr. Richards' guidance, CA hopes to accelerate this process."

Richards was selected in a complicated process in which CA named at least five attorneys it said would be acceptable to oversee the firm's cleanup. The U.S. attorney's office then whittled the list down to three, and the judge made the final selection.

Under the terms of the cleanup agreement last September, known as a deferred prosecution, Computer Associates paid $225 million to compensate defrauded investors and said it would fire all employees responsible for wrongdoing, appoint new management, add several independent directors to its board, and reorganize the finance department to ensure tighter supervision of financial practices.

Copyright 2005, Newsday, Inc.

 

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