exhibit 2 - SAP Lawsuit Portal

Case4:07-cv-01658-PJH Document875-6 Filed09/16/10 Page3 of 33
in violation of § 17(a) of the Securities Act; 4 (2) fraud in
connection with the purchase or sale of Veritas stock, in
violation of § 10(b) of the Exchange Act and Exchange
Act Rule 10b-5; 5 (3) record-keeping violations of §
13(b)(5) of the Exchange Act and Exchange Act Rule
13b2-1; 6 (4) internal control violations of § 13(b)(5)
[*3] of the Exchange Act and Exchange Act Rule
13(b)(2)(B); 7 (5) lying to auditors, in violation of
Exchange Act Rule 13b2-2; 8 and (6) aiding and abetting
reporting violations of §§ 13(a) and 13(b)(2)(A) of the
Exchange Act and Exchange Act Rules 12b-20, 13a-1,
13a-11, 13a-13 and 13b2-1. With the exception of the
fourth claim, which is asserted against Lonchar only,
each of these claims is brought against all Defendants.
2 Michael Cully and Douglas Newton, who were
named in the SEC's original complaint, have
settled and no longer are parties to this action.
3 Veritas was acquired by Symantec Corporation
on July 2, 2005.
4 15 U.S.C. § 77q(a) (Securities Act Section
17(a)).
5 15 U.S.C. § 78j(b) (Exchange Act Section
10(b)) and 17 C.F.R. § 240.10b-5 (Exchange Act
Rule 10b-5).
6 15 U.S.C. § 78m(b)(5) (Exchange Act Section
13(b)(5)) and 17 C.F.R. § 240.13b2-1 (Exchange
Act Rule 13b2-1).
7 15U.S.C. § 78m(b)(5) (Exchange Act Section
13(b)(5)). The SEC also alleges that Lonchar
aided and abetted violations of 15 U.S.C. §
78m(b)(2)(B) (Exchange Act Section
13(b)(2)(B)).
8 17 C.F.R. § 240.13b2-2 (Exchange Act Rule
13b2-2)
The SEC seeks an order that Defendants be: (1)
permanently enjoined from directly or indirectly [*4]
violating various provisions of the Exchange Act and
Exchange Act Rules; 9 (2) ordered to disgorge ill-gotten
gains including pre-judgment and post-judgment interest;
(3) ordered to pay a civil penalty; and (4) prohibited from
acting as officers or directors of any issuer that has a
class of securities registered pursuant to § 12 of the
Exchange Act or that is required to file reports pursuant
to § 15(d) of the Exchange Act. 10
9 The SEC also seeks to restrain Defendants
from directly or indirectly violating: § 17(a) of the
Securities act; § 10(b) of the Exchange Act and
2010 U.S. Dist. LEXIS 76826, *2
Exchange Act Rule 10b-5; Exchange Act Rules
13b2-1 and 13b2-2; §§ 13(b)(5) and 13(b)(2)(B)
of the Exchange Act; and §§ 13(a) and
13(b)(2)(A) of the Exchange Act and Exchange
Act Rules 12b-20, 13a-1, 13a-11 and 13a-13.
10 The SEC also requests that the Court grant
such other relief as it deems just and appropriate.
Each defendant has filed a separate motion for
summary judgment or partial summary judgment. Leslie
moves to sever certain claims alleged against Lonchar
only. Lonchar and Sallaberry move to exclude the
testimony of the SEC's experts. The SEC opposes all of
the motions. The Court heard oral argument on March 11,
[*5] 2010.
I. BACKGROUND
Unless otherwise indicated, the following facts are
undisputed for the purpose of the instant motions.
Disputed facts will be identified as is relevant.
A. Defendants' job titles
Leslie served as the Chief Executive Officer
("CEO") of Veritas from 1990 to 2000. He was
co-chairman of the board of directors from 1997 until
1999, when he became chairman. He resigned as CEO on
December 31, 2000, but continued to serve on the board
of directors until May 31, 2004. Lonchar, a Certified
Public Accountant, was the Chief Financial Officer
("CFO") of Veritas from April 1997 until October 2002.
Sallaberry was the executive vice president of worldwide
field operations for Veritas from January 2000 until
January 2003, when he became executive vice president
of sales strategy.
B. The AOL transaction
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Defendants are alleged to have violated securities
laws by misrepresenting the nature of a business
transaction between Veritas and America Online
("AOL"). During the summer of 2000, Veritas and AOL
began negotiating a license for Veritas software products
("the license") as well as certain service, consulting and
training commitments. Initially, Veritas offered AOL a
license for a fee [*6] of $ 64 million. Early in these
negotiations, AOL proposed that Veritas purchase online
advertising, but Veritas declined. In September 2000, the
parties agreed to a fee of $ 30 million for the license. At
that price, the license would have been the largest