Updated from 3:25 p.m. EDT
Sanjay Kumar, the disgraced former CEO of
, pleaded guilty in federal court Monday to charges of securities fraud.
In a written statement that Kumar read in court, the former CEO said, "I know my conduct was wrong. ... I apologize for my actions."
Stephen Richards, the former head of sales at CA also pleaded guilty to securities fraud and obstruction of justice charges at a hearing before Judge Leo Glasser in U.S. District Court in Brooklyn.
CA was deeply shaken by an accounting scandal that in 2004 (when the company was called Computer Associates) led to the resignation and subsequent indictment of Kumar and other top executives who prematurely booked more than $2 billion in sales to bolster weak quarters between the last quarter of 1998 and the second quarter of 2001.
Since then, the company has replaced nearly all of its top managers, put much stronger controls in place and entered into a deferred prosecution agreement with the federal government.
Even so, there is still some feeling that the house cleaning has not gone far enough.
"This truth-telling is a very positive step for CA shareholders and for all investors who want to learn how those responsible for their interests have conducted themselves. This should eliminate whatever concerns the current board may have had about releasing information about their own conduct," said Gary Lutin, an investment banker who has been running an online forum for CA shareholders.
, a paper based not far from CA's Islandia, N.Y., headquarters, Kumar was expected to plead guilty to all charges in return for not receiving the maximum possible sentence. But Kumar will have to serve as many as 10 years in prison, sources told the newspaper.
Kumar co-owns the New York Islanders hockey team along with Charles Wang, the founder and former chairman of Computer Associates. Wang retired as chairman of Computer Associates in 2002, when Kumar took over.
"We haven't yet seen the terms of the settlement, but we will be disappointed in it unless it requires that Sanjay Kumar assist us and any other owner who desires to pursue all of those who benefited by these made-up, overstated earnings reports," said William A. Brewer III, the lead attorney for Sam Wyly, a major CA investor. "We believe that should include Charles Wang."
CA's management commented on the guilty pleas, saying in a written statement, "CA today is led by a new management team, which has been leading a complete transformation of the company. We are a dramatically different organization than we were two years ago, when both Mr. Kumar and Mr. Richards left the company.
"As we've focused on implementing a growth strategy and building a strong company to the benefit of shareholders, customers and employees, we've been careful to put in place a comprehensive infrastructure that promotes integrity, compliance and good governance. We believe we have made significant progress in all of these areas and will continue to do so in the future," the statement said.