Volume IV

Issue : 1: January 12, 2006

• CIRA Transfers Domain Name to Complainant
• Court Finds Law Firms Use of Someone elses Password not to be Hacking
• Standard Life Wins Domain Name Dispute Against Registrant of standard-life.ca
• Canadian "Rootkit" Class Action Lawsuits Launched Against Sony
• New Mexico Supreme Court Decision Allows State to Levy Income Tax on Out of State Corporations
• UK Businessman Wins Landmark Spam Suit
• Priceline.com Successful in Dispute over Priceline.ca
• SEC Fines McAfee $50 Million
• To Fight Counterfeits Pfizer Inserts RFID Tags in Viagra Packages

Home > Volume IV > Issue 1: January 12, 2006 > SEC Fines McAfee $50 Million

SEC Fines McAfee $50 Million

On January, 4, 2006, the same day that the Securities Exchange Commission (the “SEC”) filed securities fraud charges against McAfee, the maker of antivirus software and other computer security software and hardware, McAfee consented, without admitting or denying the allegations of the complaint, to the entry of a court order enjoining it from violating the antifraud, books and records, internal controls, and periodic reporting provisions of the federal securities laws. The order also required McAfee to pay a 50 million dollar penalty, which the SEC will seek to distribute to harmed investors pursuant to the Fair Funds provision of the Sarbanes-Oxley Act of 2002.

In its complaint, the SEC alleged that McAfee violated federal securities laws in connection with its overstatement of revenues between 1998 and 2000. Specifically, the complaint stated that McAfee overstated its revenues by 622 million dollars in order to meet revenue and earnings targets and also underestimated its net losses by 353 million dollars.

The Chairman of the SEC, Chris Cox, has taken the position that the SEC “will pursue . . . individuals responsible for . . . fraud and seek penalties against them in federal court.” He states that civil penalties on a corporation, as opposed to an individual wrongdoer, are assessed on the basis of whether an issuer’s violating action results in benefit or harm to the shareholders, and takes into consideration the deterrent effect of a corporate penalty, the level of harm that was inflicted on society, the extent of corporate complicity in the violation, the presence or absence of deliberate, intentionally fraudulent conduct and the extent of corporate cooperation with authorities.

For additional information, visit:

http://www.sec.gov/news/press/2006-3.htm