— Michael Cowpland, the colourful high-tech entrepreneur whose personal holding company is accused of illegal insider trading, will represent his interests at a regulatory hearing in May in an effort to cut down on legal bills.
The former chief executive officer of Corel Corp. insisted in an interview that he is quite capable of arguing his own case during the proceedings, which could last for an entire month. However, he admitted the decision not to hire a lawyer was partly based on financial considerations.
The Ontario Securities Commission announced the hearing Thursday, a little more than a year after a three-member panel of commissioners rejected a proposed settlement between Mr. Cowpland and the regulator's enforcement staff because it was too lenient.
"I think it's very safe [to defend myself] because the facts are very simple, very straightforward, and it's easier for me to explain them for myself than to go through a third party," explained Mr. Cowpland, who is now president and CEO of Ottawa-based Zim Technologies International Inc.
"The cost is not insignificant. The thing is, I'd prefer to be investing in Zim than pouring millions [of dollars] into legal fees."
Mr. Cowpland's holding company, MCJC Holdings Inc., is accused of selling $20.4-million worth of Corel shares in August, 1997, when he allegedly possessed undisclosed information that Corel would miss its third-quarter sales targets. The software company's stock tumbled significantly after it issued a sales warning the next month, and lawyers for the regulator have estimated Mr. Cowpland avoided losses of approximately $5.2-million by making the trades in advance.
MCJC pleaded guilty in an Ontario court to parallel insider trading charges and was fined $1-million, just days before the OSC panel refused to accept the regulatory settlement.
Mr. Cowpland had agreed to pay $575,000 in fines and costs, and be banned from serving as a director of a public company for two years, according to the terms of the original agreement. But Paul Moore, who chaired the panel and delivered a strongly worded speech likening insider trading to a "cancer" on the capital markets, said at the time that the agreement lacked sufficient bite to discourage improper behaviour.
Mr. Cowpland, however, maintained Thursday that he had "no material facts" when he made the trades, and said he relishes the opportunity to explain his version of events.
"I'm looking forward to it very much, because the more I look at these facts, the stronger my position is."
Mr. Cowpland added that the regulatory process is "unpredictable," and suggested he was denied an opportunity to settle because the timing of his deal coincided with a string of accounting-related scandals in the United States, most notably the debacles at Enron Corp. and WorldCom Inc.
"The commission [panel] was mentioning gratuitous things like Enron, which I think have nothing whatsoever to do with this case, and that is unpredictable from my point of view," he said. "There's no relevance whatsoever, but that's what was brought up in the description as to why that settlement wasn't adequate."
Eric Pelletier, a spokesman with the OSC, declined to comment on whether the regulator sought to strike a revised deal with Mr. Cowpland before scheduling the hearing, but noted it is still possible for one to be reached before the proceedings begin on May 20. The OSC has scheduled one month for the hearing.
Mr. Cowpland, however, said he had no desire to attempt to hammer out a second agreement with the regulators.
"Quite honestly, I'm not interested in volunteering [to pay penalties] any more because I think this is a completely unjust case anyway."
© The Globe and Mail
Only GlobeinvestorGOLD combines the strength of powerful investing tools with the insight of The Globe and Mail.
Discover a wealth of investment information and and exclusive features.
