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Tough Day For RSA Security

Bedford, Mass.-based RSA Security is being investigated by the Securities and Exchange Commission (SEC), the company said in a regulatory filing.

The probe relates to whether a change in RSA's method for estimating distributor revenue disclosed in its quarterly report filed with the SEC should have also been in its earning press release a few weeks earlier, the company said.

In addition, the SEC will look at "certain trading in the company's securities," the company said.

"The SEC has not concluded that there has been any wrongdoing, and we don't believe that there has been any," said Art Coviello, CEO and president at RSA Security. "We are cooperating fully with the SEC on this matter."

The investigation will not require any change to RSA Security's financial statements, the company stressed.

After market's closed Thursday, the company announced fourth-quarter operating profit (not counting items) of $354,000, or a penny per share, ahead of analysts' consensus estimate of breakeven. Revenue was $63 million, $1 million less than expected. The company also struck a cautious tone discussing its 2002 prospects.

"We enter the year 2002 profitable from our core operations and in control of our business," Coviello said. "We are not, however, in control of the economy or IT spending."

Also out of RSA's hands is the reaction of stockholders to the SEC investigation news. Nervous investors sent RSAS tumbling 4.78, nearly 29 percent, to 11.35 in heavy trading. In the last 52 weeks, the issue has ranged from 6.79 to 44.334.