The U.S. Department of Justice is investigating EMC’s pricing practices and fee arrangements on sales to federal government agencies, the world’s No. 1 maker of corporate storage gear said on Monday.
If the matter proceeds to litigation, the case could result in fines as well as EMC’s (NYSE: EMC) suspension or disbarment from selling to the U.S. government, the company said.
“We believe that we have meritorious factual and legal defenses to the allegations raised and, if the matter is not resolved and proceeds to litigation, we intend to defend vigorously,” EMC said in a 10-K filing submitted to the U.S. Securities and Exchange Commission.
The investigation by the Justice Department’s Civil Division concerns allegations over EMC’s fee arrangements with system integrators and other companies that partnered with the storage equipment maker in selling products to federal agencies, according to the filing.
Investigators are also looking into whether EMC violated the terms of agreements through which it sold goods to the government, including potential violations of the False Claims Act, according to the filing.
Shares of the Hopkinton, Massachusetts-based company were down 3.3 percent at $10.15 in afternoon New York Stock Exchange trade, while the S&P 500 Index had fallen 3.6 percent.