Some analysts are now asking if Cowpland's future at the word processing and graphics software firm could be in doubt.
"It really undermines management. This is the sort of thing that I wouldn't be surprised to have the board call for his resignation," said one analyst, who asked not to be named.
"The board's going to have to ask whether this guy is a good enough leader that it's worth having this kind of egg on their face."
One charge, of tipping, alleges that Cowpland informed his holding company that Corel would fall short of 1997 third-quarter forecast sales by a significant margin. That information was was not publicly known in mid-August.
A second charge, of insider trading, alleges Cowpland sold 2.4 million shares of Corel for C$20.4 million in mid-August 1997, using that knowledge.
A third charge alleges that on May 20, 1998, Cowpland made misleading or false statements to the commission.
"These are not trivial charges," said Duncan Stewart, fund manager at Tera Capital in Toronto. "Making the allegations is easy, proving them is, in all cases, unless people are genuine dunderheads, almost impossible. Very few people write memos to themselves saying: 'Did insider trading today.' and then mail them to the OSC."
A trading halt on the Nasdaq and Toronto exchanges was not lifted after the announcement, leaving the stock to end at C$9.45 on Toronto and $6-1/2 on Nasdaq. Analysts suggest the stock may take a beating in trade on Friday.
"I'm sure the market will react negatively because it doesn't like to see things like this -- especially from CEOs," said Jean W. Orr, analyst at Nutmeg Securities Inc. in Connecticut. "From
a company standpoint, I doubt that it's particularly negative or significant."
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