by CIO Staff

Former McAfee Financial Executive Settles with SEC

Nov 01, 20062 mins

A former financial officer at McAfee, the security software company that has been under fire since 2002 for accounting irregularities, has agreed to pay more than US$757,000 to settle fraud charges by the U.S. Securities and Exchange Commission (SEC).

The SEC on Monday charged Eric Borrmann, a former senior financial officer at McAfee, of aiding a multimillion-dollar financial fraud from 1999 until he left the company in 2000. Borrmann didn’t admit to the fraud, but agreed to make the settlement payment and said he won’t work as an officer or director of a public company for five years.

The SEC accused Borrmann of knowing about fraudulent tactics that McAfee used in 1999 and 2000 to inflate revenues and helping to disseminate that false information to investors. The SEC also alleged that Borrmann used insider information when he sold McAfee securities just before the company stated dramatically lower earnings than expected. That sale earned Borrmann $314,517, the SEC claims.

The $757,563 that Borrmann has agreed to pay consists of that sale, interest on that money and a civil penalty, the SEC said.

The SEC has been investigating McAfee since March 2002 regarding accounting issues at the company. The SEC has filed four other civil actions against McAfee executives, and in January, McAfee paid a $50 million penalty to settle the investigation. The company hasn’t admitted any wrongdoing.

In October, McAfee fired its president and accepted the resignation of its chief executive and chairman as part of an investigation into problems with the way the company has granted stock options.

McAfee joins other high-tech companies, including Apple Computer, Broadcom, Sycamore Networks and Rambus, that have recently been investigated and restated earnings due to how they’ve handled stock grants.

-Nancy Gohring, IDG News Service (Dublin Bureau)

Related Links:

  • Big Changes at McAfee in Wake of Stock Options Scandal

  • Apple: CEO Steve Jobs Knew of Backdating

  • Novell Launches Internal Stock Options Probe

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