The former chairman of Corel Corp. has agreed to a $575,000 settlement in a long-running insider trading case, saying he made an "honest mistake." The deal would also see Michael Cowpland barred from serving as director of a publicly traded company for two years.

"The lesson today for an executive is that you have to look ahead to potential accounting problems," Cowpland told a crush of reporters in downtown Toronto.

"I was focused more on the operations than on the accounting at that time."

In August, 1997, Cowpland made about $20-million when he sold 2.4-million Corel shares. Less than a month after selling those shares, Corel announced disastrous financial results and the value of its stock plunged.

Cowpland and OSC investigators say that by selling the shares before announcing the lousy financial results, Cowpland avoided a loss of between zero and $1.3-million. But an OSC panel was told 18 months ago that Cowpland avoided a loss of as much as $5-million.

The amount of loss avoided is a key point because in Ontario, fines for insider trading are often keyed to the amount of loss avoided.

Now, it's up to an OSC panel to rule on the proposed settlement of the six-year-old allegations.

It's the second time Cowpland faces a decision from such a panel. About 18 months ago, another OSC panel rejected the same proposed sanctions, saying Cowpland was getting off too easy.

"Insider trading by its very nature is a cancer that erodes public confidence in the capital markets," the OSC's Paul Moore said at the time.

On Monday morning, the new three-member panel heard less than an hour of submissions from both sides and asked few questions. The chair of the panel, lawyer Wendell Wigle, said they would take some time to make a decision.

"I think we've got a lot more facts on the table now compared to the settlement we agreed to 18 months ago ... and both parties are recommending that the original settlement go ahead," said Cowpland.

Cowpland's lawyer argued, and the OSC's staff lawyer accepted, that Cowpland sold the stock to repay a debt that was coming due -- not to avoid stock-market losses.

Both sides also agreed Cowpland believed at the time of the stock sale -- incorrectly as it turned out -- that Corel had made arrangements with a software distributor that would enable the company to meet its third-quarter revenue targets.

But both sides also agreed Cowpland's belief was overly optimistic and unreasonable under the circumstances.
Under Ontario law governing the OSC, the panel cannot impose jail time or impose fines.

Instead, it can force a violator to pay for the costs of investigating the case, extract "voluntary" payments and impose numerous other sanctions, such as preventing a person from being a director or officer of a publicly traded company.

Since resigning as Corel's president and CEO in August 2000, Cowpland has headed a small Ottawa technology company, Zim Corp., and kept a low profile compared with his lavish lifestyle, which frequently captured media attention.

He lives in a mansion in Ottawa's Rockcliffe neighbourhood with his wife Marlen, who made national news by wearing a skin-tight leather cat suit with a gold-plated breast-plate to one Corel function several years ago.

Corel was taken over this summer by some California investors and its shares are no longer publicly traded.

With reports from CTV's David Akin and The Canadian Press