SEC broadens accounting probe of CA

The ongoing Securities and Exchange Commission (SEC) investigation into Computer Associates has been widened, adding to concerns about the software vendor’s accounting.

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By  Neil Denslow Published  May 16, 2002

The ongoing Securities and Exchange Commission (SEC) investigation into Computer Associates has been widened, adding to concerns about the software vendor’s accounting.

The US government’s financial regulatory agency has now asked third parties for information about their dealings with the company. CA also disclosed that the SEC review had become a formal investigation, further increasing the probability that the agency is considering enforcement action.

CA shareholders have recently been angry with Charles Wang, the company’s founder and chairman, after he and two other top executives received bonuses of nearly US$1 billion in stock between them when the share price hit a pre-set target. However, the company subsequently issued a profits warning causing the share price to collapse.

A company spokesman told the Financial Times that the investigation was into “historical revenue recognition policies and practices.” This has led to suggestions that revenue may have been overstated to help the share price hit the bonus plan target.

However, the spokesman continued, the launch of a formal probe “does not reflect any finding or determination that any violation of law has occurred.”

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