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Network Associates in SEC probe

Security software vendor Network Associates has had its name added to the growing list of tech companies under investigation for their accounting practices.

The company disclosed yesterday (26 March) that it is under investigation by the US Securities and Exchange Commission (SEC).

Network Associates also announced that it would postpone its bid to purchase all outstanding shares of its subsidiary company McAfee.com until a later date. On Monday (25 March), McAfee.com's board of directors said that Network Associates' offer to the company of 0.675 shares of Network Associates stock for each outstanding share of McAfee.com stock was insufficient.

The SEC inquiry concerns the company's accounting practices in 2000. Network Associates was run by a different management team in 2000 and appointed its current chief executive George Samenuk and a number of new management team members in 2001.

Network Associates and its auditor PricewaterhouseCoopers have double-checked the company's financial results for 2000 and "continue to believe the accounting was proper," Samenuk said yesterday.

Though he was unable to elaborate on why the SEC chose to investigate the company now or what the exact nature of the investigation is, he did say that he expects the investigation will focus on a statement released by Network Associates on 26 December 2000. In that statement, the company warned that it would post a net loss of between $130m (£91m) and $140m (£98m) for the fourth quarter of 2000, and that its top three executives would resign.

Despite the ongoing investigation, "we do not expect this to have any effect on our current business," Samenuk said.

The SEC has been busy with investigations into technology companies in recent months, with ongoing probes involving Computer Associates International, Global Crossing Holdings, Qwest Communications International, RSA Security and WorldCom.

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