McAfee to Pay $13.8 Million to Settle Backdating Lawsuits
Following a backdating scandal, McAfee has filed restated financial reports for 1995 to 2006, taking a $137.4 million charge.
IDG News Service (San Francisco Bureau) — SAN FRANCISCO (12/21/2007)—McAfee has taken two major steps toward closing the stock-option backdating scandal that has plagued the company for the past two years.
On Friday, the security vendor filed 10 years' worth of restated financial reports, a process that was set off by the scandal. The company also said it had reached a tentative settlement in a class-action lawsuit relating to its accounting practices.
Charges for the restatement will be $137.4 million. McAfee has also set aside US$13.8 million to cover lawsuits filed in 2006 on behalf of McAfee shareholders, the company said in a statement released on Friday.
McAfee is one of more than 100 U.S. companies that have been investigated by the U.S. Securities and Exchange Commission (SEC) for improper backdating of options. In backdating, companies would alter the date that stock options grants were made to certain employees so they could be purchased at a lower price and ultimately sold by the employee at a greater profit. The practice, while not illegal, was often improperly disclosed in regulatory filings, leading to SEC investigations of many high-profile companies, including Apple, Dell and Broadcom.
Earlier this year, McAfee's former legal counsel, Kent Roberts, was indicted on fraud charges related to the scandal.
The restated reports cover the period from 1995 until the first quarter of McAfee's fiscal 2006 year. The company has also filed 10-Q reports for the first three quarters of its fiscal 2007 year, putting it up-to-date with the SEC for the first time since March 2006.
