Corel founder Michael Cowpland has pleaded guilty to insider trading in the Ontario Court of Justice and will pay a C$1m (£440,000) fine.
Through his company M.C.J.C. Holdings Ltd Cowpland sold 2.4 million shares in 1997 which made a profit of C$20m.
At the time, Cowpland knew that Corel's sales would fall short of forecasts in the third quarter of 1997, a fact the company had not yet disclosed, according to Canada's main securities regulator the Ontario Securities Commission (OSC).
In September 1997 Corel posted a loss of $32m for the third quarter. Following the announcement of the losses, the price of Corel shares fell considerably.
Charges of permitting the company to take part in insider trading, and making a false statement to OSC staff, were withdrawn against Cowpland personally, the OSC said.
A statement issued by Cowpland's lawyer, Michael Edelson, said: "Dr Cowpland is pleased that the OSC has concluded that the charges against him were unfounded and have now been withdrawn."
Cowpland and his company will face additional sanctions when a three-person OSC tribunal rules on the settlement agreement on Tuesday. The tribunal will decide on a charge that, under the Securities Act, Cowpland and M.C.J.C. did not act in the public interest.
OSC spokesman Frank Switzer declined to comment but indicated that "there will be people available to comment after the commission hearings".
Cowpland, who founded the maker of CorelDraw and WordPerfect software in 1985, resigned in August 2000. He was not immediately available to comment. Cowpland is currently president and chief executive of ZIM Technologies International.
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