Corel Corp. founder Michael Cowpland has agreed to pay $575,000 to settle insider trading charges levelled against him four years ago by the Ontario Securities Commission.

Cowpland will also be barred from sitting on any corporate board for two years.

The agreement was made public as the OSC began what was to have been a three-week hearing into the case, which has its roots in a big sale of Corel stock more than six years ago.

In August 1997, Cowpland sold 2.4 million shares in Corel — worth more than $20 million — four weeks before the company issued an earnings warning. That warning sent the stock into a major decline.

The OSC alleged that MCJC holdings (Cowpland’s private company) sold the shares with knowledge of material facts that were not widely known — specifically that Corel would fall short of quarterly sales figures.

Shareholders had been expecting a profit in the third-quarter, but were surprised by a US$32 million loss.

The OSC said MCJC sold 2,431,200 shares between August 11, 1997 and August 14, 1997. During that period, Corel shares were trading for between $8.10 and $9. On Sept. 11, 1997 — right after Corel’s Q3 earnings warning — Corel shares closed at $7.05.

In February 2002, MCJC Holdings pleaded guilty in court to a single charge of insider trading and was fined $1 million. Cowpland himself agreed to a $575,000 penalty. But an OSC panel refused to accept that agreement.

Monday’s agreement, which must still be approved by an OSC panel, came on the heels of a new OSC estimate that the insider trading saved Cowpland $1,390,000. That’s considerably lower than earlier OSC estimates that put Cowpland’s gain at upwards of $5.1 million.