Slashdot Mirror
Corel CEO Charged with Securities Violations
M|U writes "Michael Cowpland, CEO of Corel, has been charged with three counts of violating securities law. CBC Newsworld has the story online, along with more details. Apparently trading of Corel stock was halted prior to the announcement. " The Corel booth at ALS has no comment at this time. The alleged current violations are insider trading, according to CBC. Update: 10/14 05:18 by H : Corel has responded in a press release. Dr. Cowpland is "looking forward to finally have the chance to clear his name..."
In case some of you forgot, Cowpland is just the CEO of Corel, he is not Corel. That means that if indeed he is found guilty of insider trading (to use the commonly known term) then he will most likely step down as CEO and someone else will be appointed. The stock in question was his own personal stock which he had purchased by himself.
Corel will take some heat over the whole deal but all in all, Corel will keep on going. Remember that a corporation is an individual, just like a person, in the eye of the law. Corel did not do anything illegal.
So, the moral of this rant - don't think that just because a company employee does something illegal that the company is going to go under or be destroyed. That would be like Rob Malda getting arrested for rotten poll answers and Slashdot getting the rm -rf / for it.
Really Bored?? http://ivany.org
Contrary to what many people are suggesting here:
1-- This has absolutely nothing to do with whether he traded at an allowed time, or filed proper advance notice. He probably did both those things, he is in trouble for something different.
2-- There definately was a victim. Every trade on the market has a buyer and a seller. Despite how it might seem when you call your broker up, you cannot buy shares out of thin air, you always buy them from someone. Whoever bough Cowpland's shares (probably a lot of people) were not engaged in a fair transaction: the person they were buying from secretly knew that they were being set up to take a fall. He had information that they could not possibly have had.
3-- Insider trading is not helpful. Someone suggested it "helps" by causing information about a company to be reflected in the price. We don't need insider trading to have this--audited financial statements that come out four times a year are pretty good at giving things away. You can shuffle the books around only so long before the GAAP rules force you to report the truth.
If Cowpland really did know that Corel was about to take a loss, and he traded at a time when he had that information and few others did, then he should fry.
That's about as greedy, inconsiderate, and illegal as it gets. OK, not as bad as if he'd made a derivatives bet--I guess even Cowpland felt that would be too obviously criminal. He was trying to be unobviously criminal--which is what criminals generally do.
Interesting Story Here!
...
BEGIN EXCERPT
By SYLVI CAPELACI -- Toronto Sun
Fibre optics seem to run in the family -- from the flashy software of Corel CEO Michael Cowp-land to the sexy hardware of his trophy wife, Marlen.
But this seductive socialite's shop talk includes silver lame, four-ply silks and, most recently, supple Italian leather.
Her Xena warrior catsuit strutted out at Coral's annual gala Wednesday was a radical departure from her sex-kitten style.
END EXCERPT
Jerks like this make Steve Jobs and Bill Gates look like really cool guys.
Basically that's it. At my company, there are certain times that are blocked out for employees above a certain rank (within a few weeks of quarterlies for instance) and everyone gets notified. For the top officers and board memebers, the schedule is even more limiting. When you run a company, they stock had better do good, because you'll have a hard time selling it while you work there.
Canada, ironically, does not have an equivalent of the SEC. This is part of the problem. Corel is being investigated by the Ontario Securities Commission, a provincial body. Financial markets are not directly regulated by the Feds and the provinces are, in some cases, quite deep into the pockets of the business community.
Ontario likes to think of itself as the home of high-tech in Canada. They may hang Cowpland, but they won't touch Corel in any way that might seriously hurt the company. The NDP might have stepped aside and let the courts decide, but the PC will never allow it to get that far out of hand.
NASDAQ suspended trading in CORL at 2:50 PM EST, the same time as TSX suspended it. That does not mean this is an SEC action, exchanges can suspend trading anytime there are serious questions, since stock markets are private ventures that are, in principle, subject only to the terms of their private contract.
Generally, it is pretty awkward to have a company suspended on one exchange and not another. Usually, the exchanges cooperate with each other and the regulators on these matters, since getting blackballed by the cops would be very, very bad for an exchange.
What the popular press calls "insider trading" should more accurately be called "trading on inside information" and it (a) does not only apply to insiders, and (b) is illegal. It covers anyone who has access to information about a company that (a) is not generally available and (b) has a material impact on the value of the company. So, if you are the boyfriend of the janitor who works for the outsourced cleaning company that cleans up at the printing company that prints the stock certificates, and you learn about an impending transaction completely inadvertantly because one of the certificates has stuck to the bottom of your [genderneutral]friend's shoe, it is illegal for you to trade on this information. It is probably illegal for anyone who works at Slashdot to monitor the logfiles and measure what some tiny public company is interested in... the whole point of publicly traded companies is that you, the average Jo, can assume you have access to all the information anyone else does.
OK, but pay attention to this: before you get all hot and bothered about the greedy people who engage in trading on inside information, consider that it actually has a positive effect on the world at large! You see, if there is secret information that tells us that a company should be worth more or less than its current price, then the question really is, why isn't this information available to the public? The more that the rapacious people-with-inside-information trade, the more the stock price will move in the direction in which it should be moving.
So, if you sold stock at a low price to someone who knew "inside" that it was worth more, you have a right to be angry. But if you didn't engage in any trading, you should be angry that the info was not public, not that the people who did know were motivated to trade on it. Who wouldn't be?
[Note: I own Corel Stock]
There may be a difference between Canadian and US regulations (but presumably he would have to follow both since the stock trades in both countries), but in the US for an insider stock sale (which was back in 1997, for those who haven't read the details) you have to file a Form 144: 'Intention To Sell Restricted Securities' but you can do it anytime prior to, upto and including, the day of the sale. (see this Insider Trades FAQ)
I also want to comment that from reading the allegations it sounds like a pretty weak case in that MC made an effort to ensure that sales would meet expectations, and didn't know until 25 days AFTER he sold the shares that those efforts weren't successful.
Also it should be noted that he sold the stock when it was at around C$8 and its now about C$10 so anyone that has held on to the stock was better off than having put it in the bank.