Feeds

NAI offers $70m to settle class action suit

Shadow of SEC probe lingers

  • alert
  • submit to reddit

Using blade systems to cut costs and sharpen efficiencies

Network Associates (NAI) yesterday announced an offer to pay $70 million to settle a class action brought by shareholders who allege the company used improperly booked revenues to ramp up its share price.

According to the lawsuit the IT security firm misled investors during the late 1990s by recording software sales when technology was shipped to distributors instead of when users actually bought product, a practice known as channel stuffing.

The action was brought to light by a PwC audit in late 2000, after which NAI was forced to restate its results. This triggered the class action lawsuit and coincided with the departure from NAI of flamboyant former chairman and CEO Bill 'Liberace' Larson, former president Peter Watkins and former CFO Prabhat Goyal, each of whom was named in the class action suit.

NAI's current management is keen to draw a line under the affair, hence the proposed $70 million settlement.

"This settlement represents a significant milestone in Network Associates' move from past issues to future opportunities," said NAI's current chairman and CEO, George Samenuk.

NAI's proposed settlement is subject to agreement by the parties to the lawsuit and court approval.

Aside from the class action lawsuit, NAI is still under investigation by the Justice Department and the Securities and Exchange Commission regarding the way it historically booked revenue from its distribution partners.

The Company announced in March last year that it would restate its 1998, 1999 and 2000 financial statements to reflect revenue on sales to distributors on a sell-through basis, which is how the company has reported sales to distributors since January of 2001. At the time it also announced a decision to delay filling its financial results for 2002.

NAI yesterday said it expects to be able to file its results for 2002 and the first half of 2003 with the SEC by the end of October this year. ®

Related Stories

NAI faces SEC probe
Network Associates settles shareholder lawsuit (about booking the cost of acquisitions

Boost IT visibility and business value

More from The Register

next story
Secure microkernel that uses maths to be 'bug free' goes open source
Hacker-repelling, drone-protecting code will soon be yours to tweak as you see fit
How long is too long to wait for a security fix?
Synology finally patches OpenSSL bugs in Trevor's NAS
Israel's Iron Dome missile tech stolen by Chinese hackers
Corporate raiders Comment Crew fingered for attacks
Roll out the welcome mat to hackers and crackers
Security chap pens guide to bug bounty programs that won't fail like Yahoo!'s
HIDDEN packet sniffer spy tech in MILLIONS of iPhones, iPads – expert
Don't panic though – Apple's backdoor is not wide open to all, guru tells us
Researcher sat on critical IE bugs for THREE YEARS
VUPEN waited for Pwn2Own cash while IE's sandbox leaked
Four fake Google haxbots hit YOUR WEBSITE every day
Goog the perfect ruse to slip into SEO orfice
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.