Forum for Shareholders of CA, Inc.

Forum Home Page

Pending Status

Forum activities relating to CA, Inc. are temporarily suspended pending release of a court-appointed Examiner's report on management compliance with a Deferred Prosecution Agreement.

CA Forum Home Page

CA Research Reference


Forum Report: Plans for Immediate Oversight Requirements

(January 19, 2005)


January 19, 2005 CA Forum Report


Plans for Immediate Oversight Requirements

            Anyone interested in establishing effective shareholder oversight procedures is encouraged to help develop plans relating to two matters requiring immediate attention:

I.          “Restitution Plan” for distribution of $225 million to shareholders

A court-appointed “Fund Administrator” is to prepare a “Restitution Plan” for distributing a $225 million corporate penalty – 38 cents per outstanding share of CA stock – to present and former shareholders.[1]

There are many different and often conflicting opinions about how the allocations should be determined.  To assure the Fund Administrator’s consideration of all relevant shareholder interests, we will need a fair, orderly process for learning his criteria and providing him with representative investor views.

II.         Responsibility for claims against directors

A court is expected to decide whether potential corporate claims against former and current CA directors should be controlled by the Wyly group, through their derivative lawsuit, or by CA’s current board of directors.  (It should be noted that the government is proceeding with criminal and regulatory actions involving some of the same facts and people, but the DOJ and SEC cannot be expected to assume responsibility for private corporate claims.)[2]

The court should be informed of shareholder views regarding their reliance on either the Wyly group or the CA board to represent investor interests in a matter critical to corporate integrity.  Most importantly, we must establish a practical process for responsible shareholder oversight of future decisions relating to the claims, and report these plans to the court for possible relevance to its decisions in the case.

            The planning process will require our consideration of many different types of issues, ranging from the logistics of cost-efficient information exchanges to the recent changes in public perceptions of responsibility standards.  And these issues should be considered in the context of broader applications, beyond your direct financial interests in the specific CA matters being addressed.  To be practical, what we develop now should be something that you can use also in your oversight of other investments.  More significantly, though, what you do in this case may be widely seen as an example of what can and should be expected of investment fiduciaries.

            Your advice will be welcomed to help define the processes and issues that should be considered.  CA management is expected to offer their advice regarding cooperative communication protocols for the company’s and directors’ responses to investor information requirements.[3]  The Forum may also invite advice from independent experts who can authoritatively address the issues you find important.

            If you want to explore more active involvement, either in defining the processes or in serving as a shareholder delegate for actual oversight functions, please inform me of your interest.

            GL – 1/19/05

Gary Lutin

Lutin & Company

575 Madison Avenue, 10th Floor

New York, New York 10022

Tel: 212/605-0335

Fax: 212/605-0325



[1] The September 22, 2004 Deferred Prosecution Agreement with the DOJ and SEC in United States of America v. Computer Associates International, Inc., Cr. No. 04-837 (ILG) in the U.S. District Court of the Eastern District of New York, requires CA’s payment of $225 million from corporate funds, effectively holding existing shareholders responsible for their company’s conduct according to public policy. Paragraph 11 of that Agreement provides for a DOJ-approved Fund Administrator’s preparation of a Restitution Plan to distribute the cash to “present and former CA shareholders injured by the conduct” described in the Agreement.  The proposed Restitution Plan is to be submitted for approval of the U.S. Attorney’s Office by May 4, 2005.

[2] In Computer Associates International, Inc., Derivative Litigation, Civil Action No. 04-2697 (TCP) in the U.S. District Court of the Eastern District of New York, the Wyly group seeks control of CA corporate claims against former and current officers and directors based on assertions that the company’s existing board of directors cannot be relied upon to represent shareholder interests.  A court scheduling order requires the filing of  responses to the Wyly group’s amended complaint by February 21, 2005.  (Copies of the complaint and other relevant court records are available upon request.)

[3] See December 8, 2004 letter inviting management cooperation.



The Forum is open to all Computer Associates ("CA") shareholders, whether institutional or individual, and to any fiduciaries or professionals concerned with their investment decisions.  Its purpose is to provide shareholders with access to information and a free exchange of views on issues relating to their evaluations of alternatives, as described in the Forum Summary.

There is no charge for participation.  As stated in the Conditions of Participation, participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

Inquiries and requests to be included in the Forum's distribution list may be addressed to

The material presented on this web site is published by Gary Lutin, as chairman of the Shareholder Forum.