Blame Canada

Corel Corp., the Canadian software company that manufactures WordPerfect, has agreed to pay $7 million to settle a securities class action based on allegedly misleading statements it made in 1999 and 2000 concerning its entry into the Linux market. The case is pending in the E.D. of Pa.

According to an article in the Legal Intelligencer (via law.com – free registr. required), the plaintiffs’ damages expert had estimated losses of about $46.3 million based on the alleged fraud. The article discusses in some detail the plaintiffs’ justifications to the court for accepting a 15% recovery, including Corel’s poor financial position, the defendants’ argument that the investors had not suffered any damages, and the relatively small amount of D&O insurance that would be available after a trial. Plaintiffs also alleged that the Corel’s defense lawyers had threatened to seek the protection of the Canadian bankruptcy court if plaintiffs managed to obtain a judgment.

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