Internet security specialist Network Associates on
Tuesday announced it would pay $70 million to settle a slew of class action
lawsuits alleging stock price inflation.
The Santa Clara, Calif.-based firm, which markets anti-virus and network
management software, has entered into an agreement to settle the pending
class action suits filed in 2001 and alleging that Network Associates
made “positive but false statements about current business and future
prospects throughout the second half of 2000.”
The settlement, which is subject to court approval, calls for Network
Shareholders to be paid $70 million.
Network Associates CEO George Samenuk described the settlement deal as an
opportunity for the company move past the accounting controversy that
erupted last year and led to the departure of chief executive Bill Larson.
At that time, the company was accused of “channel stuffing” – overselling
to its distributors to pad short-term results. After an internal audit,
Network Associates agreed to change its accounting practices but the
Securities and Exchange Commission (SEC) is still conducting an
investigation into the company’s operations.