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[letterhead]
LUTIN & COMPANY
575 Madison Avenue
New York, New York 10022
Telephone (212) 605-0335
Facsimile (212) 605-0325
January 26, 2005
By telecopier: 212-527-9611
Kenneth R. Feinberg, Esquire
The Feinberg Group, LLP
780 3rd Avenue, 28th Floor
New York, New York
Re: Computer Associates International, Inc.
Restitution Plan
Dear Mr. Feinberg:
As discussed, the “Restitution Plan” you are preparing pursuant
to the CA Deferred Prosecution Agreement is very important to participants
in the “Forum” program I’m conducting for the company’s shareholders. Most
of this country’s retirement funds and many private investors have
significant financial interests in the specific CA penalty – paid from
corporate assets owned by current shareholders, at 38 cents per outstanding
share – as well as in the definition of standards that can be applied to the
rapidly expanding use of publicly created investor restitution funds.
Your interest in establishing precedent processes for the fair
and open consideration of investor views should be widely appreciated, and
will certainly encourage confidence in the recovery of both CA and the
capital markets generally. You may of course rely on Forum support of your
efforts. I will arrange for your investor communications to be distributed
to Forum participants and posted on the Forum web site. And I will be glad
to consider other independent Forum activities such as surveys, open
meetings, or expert panels that may contribute to your effective review of
relevant investor interests.
Regarding your interest in the range of issues that may be
raised by investors, the following questions are intended as examples:
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How should allocations be made between injuries resulting (a) from
purchases of stock at fraudulently inflated values and (b) from continuing
impairment of shareholder value associated with corporate costs and
credibility damage?
Some investors may argue that injuries for fraudulently inflated prices
have been fully compensated by the recent settlement of class actions, so
that all or at least most of the Restitution Fund should be allocated to
the injuries for actual value impairment that were not covered by the
fraud settlement.
- Is
it appropriate to provide restitution in relation to stock bought after
investors should have been aware of corporate integrity questions raised
in news reports as early as April 2001?
Arguments may be made that anyone investing in CA after that date, or in
any event after 2002 news reports, either was or should have been informed
of the corporate integrity risks.
- Is
it appropriate to allocate any of the Restitution Fund to an affiliated
21% shareholder that had supported past management, or at least tolerated
their conduct?
It may be argued that a controlling shareholder, with its access to
information and ability to influence management, should not be treated the
same as victimized public investors.
Please let me know what information will be useful to you, and
when you will need it. Understanding that you intend to prepare a
preliminary review of criteria for review with the U.S. Attorney’s Office by
the end of next month, I will accordingly encourage Forum participants now
to focus on your priority interest in identifying issues.
Please also let me know if you want any additional information
about the CA Forum program, or about any of the issues it has addressed or
may address. I hope you will find the Forum helpful in your efforts to
benefit CA’s present and former shareholders.
Sincerely,
Gary Lutin
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