NAI Settles Class-Action Lawsuits
Network Associates agrees to pay a group of shareholders $70 million, resolving suits in which the company was accused of misleading its shareholders by booking revenue improperly.Network Associates Inc. on Monday agreed to pay a group of shareholders $70 million to settle some class-action lawsuits against the company. The settlement, which is still subject to approval by the U.S. District Court for Northern California, resolves suits in which shareholders accused the company of misleading them by booking revenue improperly. The suits, filed in 2000 and 2001, were just part of a messy picture relating to some accounting problems that resulted in the resignation of several top executives as well as ongoing investigations by the Department of Justice and the Securities and Exchange Commission.
The lawsuits were brought by investors who accused NAI of overloading its resellers with inventory in an effort to book more revenue. Under NAIs accounting practices at the time, the company recognized revenue when it shipped products to resellers, instead of when the reseller actually sold the product. NAI has since changed that practice.