Michael Cowpland, president and CEO of Corel, disputed charges filed by the Canadian Ontario Securities Commission (OSC), accusing him of three counts of violating Ontario securities laws.
The commission charged Cowpland with using insider information about a lower-than-expected quarterly financial report, for Corel's third quarter of 1997, to sell 2.43 million shares of Corel stock for about $14 million, said Frank Switzer of the Ontario Securities Commission
"He is charged with what is commonly known as tipping, insider trading and making a misleading statement to the securities commission. The holding company of which he is a director did the trade," Switzer said. "We allege he was in possession of a material fact that Corel would fall short of the forecast for the third quarter of 1997 by a significant margin."
The commission administers and enforces securities legislation in the Canadian province of Ontario. Corel is based there in the city of Ottawa.
In Corel's counter-statement, Cowpland said: "I am looking forward to finally having a chance to clear my name by responding to these matters, which are now more than two years old." The statement called the investigation a private matter between the commission and Cowpland, which would not affect the company's day-to-day business - nor his position with the company.
Cowpland has been CEO and president of Corel since he founded the company 14 years ago.
If found guilty, he could receive a sentence of up to two years in prison, a fine of up to $700,000, and be forced to pay a penalty of up to three times the profit gained from the trade in question. The commission has not disclosed the profit from the trades.
Cowpland and his holding company are prohibited from engaging in any trades for the next 14 days, although he is appealing the order.
In its statement of allegations, the commission said Cowpland's holding company sold the Corel shares from August 11 to August 14, 1997, after Cowpland was informed by a Corel vice president that the company would fall short of forecasted sales. The new information was not disclosed to the public, the commission said.
Corel shares on the NASDAQ stock exchange rose 6.67 per cent today, ending at $6.5, up 40 cents.