Network Associates under officialinvestigation by the SEC

Network Associates has put its bid to buy the remainder of McAfee.com on hold as it faces an investigation into its accounting...

Network Associates has put its bid to buy the remainder of McAfee.com on hold as it faces an investigation into its accounting practices by the US Securities and Exchange Commission (SEC).

The SEC has launched a formal enquiry into the vendor's fiscal 2000 accounting practices, causing NAI's share price to drop 11 per cent.

At the same time, McAfee.com rebuffed a bid by NAI - which is a major shareholder - to acquire the 24 per cent of shares it does not already own.

NAI CEO George Samenuk said the SEC had contacted the firm informally after it revealed a $120m (£84.3m) revenue shortfall on 26 December 2000.

"We believe [the SEC] is looking at 26 December and then all of 2000 to check everything is correctly accounted for," he said.

The enquiry is focused on events that predate the arrival of Samenuk, who took office in January 2001.

There is speculation among analysts that the SEC was looking into whether NAI was "channel stuffing", or artificially boosting revenues, by sending distributors more product than would be sold.

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