Veritas Settles with SEC for $30 Million in AOL Fraud Case
Veritas Software has agreed to pay the Securities and Exchange Commission $30 million to settle charges that the company collaborated with AOL as early as 2000 to unfairly inflate advertising sales numbers and defraud investors. According to the SEC, Veritas and AOL inflated sales by as much as $20 million.
Both AOL and Veritas reevaluated their earnings in 2003 and 2004, removing the inflated numbers from this and other similar deals from their earning reports.
AOL paid the SEC $300 million in 2005 for the same infringement. The SEC says the larger amount was due to greater misconduct and larger accounting exaggerations by AOL. Veritas was also charged with aiding and abetting AOL.
According to the complaint, Veritas “artificially inflated reported revenues in connection with a $20 million round-trip transaction with America Online,” and “to produce what it believed were exceptional or ‘museum quality’ financial results, Veritas systematically manipulated its financial results through 2002 by periodically recording and maintaining excess accrued liabilities or cushions in its accrual accounts.”
AOL merged with Time Warner in 2000, and Veritas was purchased by Symantec in 2005 for $10.25 billion. Anticipating the fine, Symantec had already budgeted an extra $30 million. The SEC says it will distribute the $30 million to investors under the Sarbanes-Oxley act.
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