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Security Vendor McAfee to Pay $50 Million Fine

Zonk posted more than 8 years ago | from the do-the-crime-pay-the-fine dept.

Security 229

goombah99 writes "RedHerring.com reports that Security Vendor McAfee has agreed to pay a fine of fifty million dollars stemming from false SEC filing. McAfee cooked its books, overstating its revenues one year by 131%, or half a billion dollars. The method employed was 'channel stuffing' in which compliant re-sellers are effectively paid to buy and hold inventory they may never sell. The shipped goods are booked as revenue and the payments disguised in the books. When it caught up with them, McAfee's stock price crashed, wiping out a billion dollars of shareholder capitalization. The story quotes an analyst saying this maybe the swan song for the once dominant vendor."

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229 comments

Oh, what a... (5, Funny)

Bin_jammin (684517) | more than 8 years ago | (#14400622)

disappointment. After they're gone, I'm sure it'll only be another twenty years before I stop seeing customers' boxen with Macafee's anti-virus expired demo notification popping up every time I touch it. Maybe they should have given away more nagware, that might have helped.

Re:Oh, what a... (4, Insightful)

donnyspi (701349) | more than 8 years ago | (#14400781)

I see plenty of Norton demo expiration alerts appear on computers I fix. I think it's misleading and annoying to have virus protection expire after 90 days of use. I've seen plenty of people who see that Norton or McAfee is still on their system so they think they're protected. Of course, the responsibility of wise computer use should be that of the user, but let's face it, most users don't know much anyway and having their anti virus expire on them just confuses them more.

Re:Oh, what a... (2, Interesting)

hhlost (757118) | more than 8 years ago | (#14400946)

Both Norton and McAfee are garbage. Both run like a pig, make your system run like a pig, invade the entire system and aren't terribly effective. Use ZoneAlarm Antivirus instead. It's $20 a year, lightweight and I've never had a problem with it in 3 years.

Re:Oh, what a... (2, Interesting)

brontus3927 (865730) | more than 8 years ago | (#14401075)

When Norton was getting ready to expire on my mother's computer, it gave her a pop-up message everyday saying that the subscription was going to expire and after that, she wouldn't be protected against new viruses, and gave a link to buy another year's subscription. I did this every day until I uninstalled Norton and installed AVGFree

I know. (1)

game kid (805301) | more than 8 years ago | (#14400853)

Found a link to avast! [avast.com] on a Slashdot comment. Switched from Symantec's own demo version preinstalled on my PC (thanks for the time). Never looked back.

The only nags I get now (which can be switched off) are those of automatic daily updates. For me, that's a Good Thing®.

Demos are nice. Free stuff is better. Hunt down freedom whereever it hides (and I don't mean domestic spying ;) ).

Re:Oh, what a... (4, Interesting)

scronline (829910) | more than 8 years ago | (#14401140)

Well, that's funny. I don't see ANY nagware out of mcafee and that's part of the problem. I see it updating whenever it's an active subscription, but after that it just doesn't do anything. This is the online/newest version not the old stuff that did nag all the time. The problem I see with McAfee is everything is all online. While that's a good way to do it, customers sign up, then change ISPs, then change ...., and a year later they don't remember what information they used for online registration. The client doesn't even show their email address used so you have to take guesses at it. In several cases they have to buy a brand new AV client simply because they don't have access to the old email address.

Furthermore, I've had cases where their antivirus would keep the anti-spam from working and thus mail would never get delivered. It would just sit there fighting each other. Let's not even talk about the thousands of machines that come into my shop that won't even boot because McAfee is damaged. Boot into safe, uninstall McAfee and the system will boot properly.

I don't disagree that you would see McAfee for years after it's gone (by whatever method), but that's partly because of the poor way they keep the customer informed and handle the account/licensing. Their products are in desperate need of a complete revamping. I even get about 300 "spam from your network" emails because of their crap client a day. Not a single one of them come from my ISP, they just spoof an email address on domains run/hosted by us or spoof our domain in the EHLO statement.

That's not to say Symantec is any better. Up until the 2006 version I was pleased with Norton, but now it's just so in your face that you have to wait 5 minutes after boot up before really doing anything because of a popup screen that says "Norton is up and working properly" kind of crap and will sit there for 30 seconds or until you physically close the window yourself. I've had quite a few times their stupid little popups gets right in my way, or even kicked me out of a game I was playing

Mainstream AV is too intrusive (but I can understand why since users just keep ignoring what it's saying) and in several cases ineffectual. They are all bringing a false sense of security and allow users to think they don't still have to follow good security on their own like....I don't know....not opening email attachments they aren't expecting.

On that note, I'll bet money on the fact that more than 70% of the computers that were infected with the most recent outbreak of the sober virus were all computers purchased with McAfee OEM with only 90 days of service and probably half of those weren't even activated the other half were unknowingly (or uncaring) expired. Gotta love it when OEMs use McAfee as the default OEM product by default.

The thing to remember about nag screens, they are there for a reason. Users always "oh, I just clicked close on that" and then complain about "why do I get viruses", "why do people do that", "is there anything I can do to go after these people?", and my personal favorite "what can I do to keep this from happening again?".

Dabu? (-1, Offtopic)

Anonymous Coward | more than 8 years ago | (#14400623)

Zug Zug

wtf? (5, Funny)

User 956 (568564) | more than 8 years ago | (#14400632)

This is reminiscent of Enron's mark to market [investorwords.com] accounting, wherein you basically determine the real market asset value, then you just make up a bunch of shit.

Re:wtf? (1)

rmjohnso (891555) | more than 8 years ago | (#14400728)

Mark to market isn't what Enron did. Enron did what is called off-balance sheet financing, which is where companies are created and used to hold lots of liability to keep it off of the main company's books. This is perfectly legal, except you were supposed to have a 2% ownership in the new company. Enron didn't even have close to 2%, and the Andersen auditors didn't report it.

Yes, it is what Enron did. (2, Informative)

User 956 (568564) | more than 8 years ago | (#14400807)

Mark to market isn't what Enron did.

Yes, Mark-to-market is what Enron did [stanford.edu]:

"As McLean pointed out, her Fortune article, "Is Enron Overpriced?" appeared in March 2001. Yet in 1993 an article in Forbes sharply questioned Enron's troubling mark-to-market accounting for assets, which claimed profits for investments long before it was clear that they would in fact evolve. A few years later, an article in Fortune again signaled concern."

Re:Yes, it is what Enron did. (3, Informative)

rmjohnso (891555) | more than 8 years ago | (#14400883)

Re:Yes, it is what Enron did. (5, Funny)

GuyverDH (232921) | more than 8 years ago | (#14400914)

It appears that they may have actually been implementing more than one bad accounting practice.

Why limit yourself to just one.

Re:Yes, it is what Enron did. (1)

User 956 (568564) | more than 8 years ago | (#14400941)

It appears that they may have actually been implementing more than one bad accounting practice.

I believe they were implementing the Lay-Skilling "More the Merrier" approach to accounting fraud.

Re:Yes, it is what Enron did. (1)

aug24 (38229) | more than 8 years ago | (#14400981)

...and there was me originally thinking it was joke accounting practice along the lines of 'get the mark to market and fleece the poor fuck'. Blimey, I learned something on /.!

J.

Re:wtf? (1)

Pope (17780) | more than 8 years ago | (#14400965)

Not only Enron, but Microsoft routinely moves future estimated pre-sales of their products to current year's tallies, making it near-impossible to gauge their true sales numbers.

an honest question (1)

User 956 (568564) | more than 8 years ago | (#14401124)

Microsoft routinely moves future estimated pre-sales of their products to current year's tallies, making it near-impossible to gauge their true sales numbers.

Is that different, at all? I mean, Microsoft's business model is somewhat akin to a subscription service, correct? (this is a serious question)

Enron, on the other hand, booked $53 million in profit on their on-demand-video co-venture [cnet.com] with Blockbuster, before the technology was even proved viable.

A page from "Chainsaw Al" Dunlop's book (0)

Anonymous Coward | more than 8 years ago | (#14401032)

What it really reminds me of is what "Chainsaw Al" Dunlop did at Sunbeam.

http://en.wikipedia.org/wiki/Albert_J._Dunlap [wikipedia.org]

I'll bet upper-management was dumping stock as fast as they could while keeping the price up with this sad old trick.

Fines are not enough (5, Interesting)

110010001000 (697113) | more than 8 years ago | (#14400634)

Fines are not enough and hurt shareholders more than those who are responsible: the executives. The true punishment should be fines and jail time for the COO, CFO, CEO and all the other Cx0's. What does fining a company do except bleed the shareholders?

Wait just a minute (4, Funny)

Luscious868 (679143) | more than 8 years ago | (#14400733)

Fines are not enough and hurt shareholders more than those who are responsible: the executives. The true punishment should be fines and jail time for the COO, CFO, CEO and all the other Cx0's. What does fining a company do except bleed the shareholders?

Hey, wait just a second. Leave the poor CTO out of it :-)

Yeah. (1)

game kid (805301) | more than 8 years ago | (#14400889)

The Chief Tittays Officer rocks! Do not forget that.

*to angered female Slashdotters* Fine, forget that.

Re:Fines are not enough (2, Insightful)

wiggles (30088) | more than 8 years ago | (#14400735)

The true punishment should be fines and jail time for the COO, CFO, CEO and all the other Cx0's

I thought this what Sarbanes-Oxley was supposed to do. Anyone more knowledgeable than I know for sure?

Re:Fines are not enough (3, Insightful)

Reducer2001 (197985) | more than 8 years ago | (#14400960)

As far as I can tell, SOX only causes pain and suffering to IT and accounting departments, and does not actually prevent executives from doing anything wrong. (IMHO as a low-level network flunky as part of a publicy-traded company)

Re:Fines are not enough (1)

devilsadvoc8 (548238) | more than 8 years ago | (#14401078)

Sarbox provides in Title III Section 304 that certain bonuses of the CEO and CFO during the previous 12 mo period as well as profits on sales of the entity's securities are forfeit. Additionally it widens the scope of penalties already in place from the Securities Acts of 1933 and 1934 (section 305).

However, the financial statements in question are from 1998 through 2000 which PREDATES Sarbox reach. So they get to keep any bonuses or stock profits. That doesn't mean civil suits can't go after them and bleed them to death in court, however.

Re:Fines are not enough (1)

User 956 (568564) | more than 8 years ago | (#14400768)

Fines are not enough and hurt shareholders more than those who are responsible: the executives. The true punishment should be fines and jail time for the COO, CFO, CEO and all the other Cx0's. What does fining a company do except bleed the shareholders?

Dude, the whole function of the corporation as we know it is designed as such to shield individuals [quicken.com] from direct legal action. That's why they're so popular.

Re:Fines are not enough (1)

Anarke_Incarnate (733529) | more than 8 years ago | (#14400855)

That relates to the ownership of the corporation. Publicly traded corporations are owned by thousands or more people. Those working for them are not to be shielded simply because they are employees. They are the ones who did the deed. If someone steals from a 7-11 and works there, they should be punished.

Re:Fines are not enough (1)

User 956 (568564) | more than 8 years ago | (#14400905)

Publicly traded corporations are owned by thousands or more people. Those working for them are not to be shielded simply because they are employees.

I don't disagree with your general point. My comment was a pithy remark intended to generate a laugh response, commonly known as "humor" among the higher-level anthropoid species.

Re:Fines are not enough (1)

D-Cypell (446534) | more than 8 years ago | (#14400895)

If the business goes bankrupt then yes, shareholders are only liable for the money they have already invested (it is probably a little more complex than this, but on the whole...).

However, officers are not protected against negligence or fraud. Surely you have seen the news of proceedings against Worldcom and/or Enron executives.

Re:Fines are not enough (2)

SeekerDarksteel (896422) | more than 8 years ago | (#14400921)

The corporation is intended to shield individuals from direct financial liability. It has absolutely no weight in shielding an individual from criminal liability. In this case the management of the company is committing fraud by misrepresenting their financial situation to investors. If the CEO were to, say, have a competitor's manager killed in order to increase business, the fact that he ordered it as an agent of the corporation does not somehow magically shield him from criminal charges. The executives in this case committed fraud and should be held criminally liable for their actions.

Re:Fines are not enough (4, Insightful)

corbettw (214229) | more than 8 years ago | (#14400942)

Dude, the whole function of the corporation as we know it is designed as such to shield individuals from direct legal action. That's why they're so popular.

Dude, you don't know what the hell you're talking about. Corporations shield their owners from bankruptcy and civil courts (to an extent). They do not shield the officers of those corporations from criminal charges. Just ask Enron Chief Accountant Richard Causey [cnn.com], who's serving seven years in jail for his role in the corporation's implosion. His old bosses, Ken Lay and Jeffrey Skilling, are about to get their day in court in the next few months, too. If they can find an impartial jury, that is (if they're smart, they'll try to plead out, but if they were smart they wouldn't have cooked the books in the first place...but that's another story).

I don't know where this myth of corporations protecting people who out-and-out break laws came from, but it's not in the least bit grounded in reality. The cases where corporate executives get away with murder, figuratively and literrally, have more to do with state corruption than the legal fiction behind the "corporate veil". The infamous Union-Carbide tragedy was as much an exemplar of the corruption in certain parts of the Indian government as it was the amorality of company officials.

Re:Fines are not enough (1)

AK Marc (707885) | more than 8 years ago | (#14401000)

Dude, the whole function of the corporation as we know it is designed as such to shield individuals from direct legal action.

Dude, the whole function of the corporation is to shield investors from direct legal action. If you commit criminal fraud, whether you did it for a corporation or for your grandma shouldn't matter to the judge that throws you in jail.

Re:Fines are not enough (0)

Anonymous Coward | more than 8 years ago | (#14400898)

Am I the only one that thinks they got off easy with only a $50mm fine? Granted, I didn't RTFA, but it seems that the shareholder losses generated by the crash of their stock would have had much more of an impact than the stated fine. Shouldn't the penalty reflect the damage inflicted?

Re:Fines are not enough (1)

shoshanaz (893575) | more than 8 years ago | (#14401182)

Right. But instead of jail make them serve their time as customer support reps, or give them broken computers and make them fix them by relying customer support. I can recommend a couple of companies where that would provide a more hellish experience than jail.

One of the oldest (4, Funny)

IAAP (937607) | more than 8 years ago | (#14400646)

accounting tricks.

The method employed was 'channel stuffing' in which compliant re-sellers are effectively paid to buy and hold inventory they may never sell.

I think there should be class in 'B' school called, "Accounting Tricks That Get You In Trouble with the Law: You're not as smart as you think you are."

Re:One of the oldest (2)

rmjohnso (891555) | more than 8 years ago | (#14400702)

There is a class called that. It's call Introduction to Auditing, which all accounting students take. What's bad is that the auditors for McAfee missed this.

Re:One of the oldest (1)

IAAP (937607) | more than 8 years ago | (#14400758)

It's call Introduction to Auditing, which all accounting students take

Which is the problem with management. The auditors will catch the problem after it's happened. I'm just suggesting (tongue in cheek) that there should be a class for managers so that they don't even attempt it in the first place.

Then again, they might have known exactly what they were doing and just said, "Fuck it! Even if we do get caught, the lawyers will bail us out, we'll get slapped on the wrist, and the shareholders will pay the bill."

Re:One of the oldest (2)

rmjohnso (891555) | more than 8 years ago | (#14400816)

The people doing the books in the accounting departments should have a fundamental knowledge of auditing. This includes the Controller and CFO, who are ultimately responsible for the financial statements. If they, or an internal audit department, see this activity taking place, then they should take actions to correct the financial statements before issuing them to the SEC and the public.

What it all boils down to is that either detective controls were not in place to detect channel stuffing, or the detective controls were just ignored.

Re:One of the oldest (1)

sjwaste (780063) | more than 8 years ago | (#14401143)

The thing about channel stuffing is that your company isn't generally on the hook to keep track of other companies' inventory. The way it works is that Distributor agrees to buy and hold a ton of inventory from Manufacturer, probably in exchange for a cash kickback. Once Company sells to Distributor, it's a clean sale, because Company's not really on the hook to track Distributor's inventory (assuming C doesnt own D, which they usually wouldnt). It would be hard to detect even internally, as it doesn't really differ from an ordinary sale. Money comes in, things are delivered, and it looks clean. You'd have to first suspect this, then try to sniff out evidence of the kickback involved. The bottom line is that it's far easier to get away with being crooked, unless everyone in the company is treated like a suspect from the time they're employed.

I'm not justifying this behavior at all, I just want to point out that its probably a lot easier to do and a lot harder to detect than you're aware.

Re:One of the oldest (1)

Anonymous Monkey (795756) | more than 8 years ago | (#14400956)

My accounting 101 professor referred to his class as 'embezzlement 101' because, in his words, "the point of accounting classes is not to teach you accounting, but to teach you how to know when some one else is doing it fraudulently,"

Five years later, my job is to envision ways to steal money from my company and then devise a method of detection. Audit accounting is mostly fraud detection after all.

Re:One of the oldest (3, Insightful)

rmjohnso (891555) | more than 8 years ago | (#14401192)

Actually, auditing is NOT fraud detection. The following wording is taken from a standard audit opinion letter:

http://www.dsbcpas.com/services/accounting/audit/o pinionaudit.html [dsbcpas.com]

Notice that fraud is NOT included in the opinion. The idea of fraud is to go undetected, and you cannot audit for collusion. Therefore, unless the environment suggests fraud is taking place, fraud is discovered by the company or auditor in the normal course of operations or the audit, or if the company reports to the auditor that fraud is taking place, it is extremely difficult to audit for fraud, if not impossible.

The following link is to the auditing standards by the AICPA
http://www.aicpa.org/members/div/auditstd/auditing _standards.htm [aicpa.org]
See:
SAS 1 - Responsibilities and Functions of the Independent Auditor
SAS 99 - Consideration of Fraud in a Financial Statement Audit

Re:One of the oldest (0)

Anonymous Coward | more than 8 years ago | (#14400826)

There is - that's where these guys learned it.

Re:One of the oldest (1)

sjwaste (780063) | more than 8 years ago | (#14401047)

I think there should be class in 'B' school called, "Accounting Tricks That Get You In Trouble with the Law: You're not as smart as you think you are."

Were you a business student, by any chance? Just wondering because my school definitely did cover this in a required course for all BBA candidates. Actually, I believe it was covered in both my required marketing and accounting coursework.

Just because you teach it, doesn't mean someone won't think they haven't found the "foolproof" way to implement it.

It's good to be the king (1, Interesting)

Sheetrock (152993) | more than 8 years ago | (#14400648)

Seems like a lot of companies are into hot potato. When did it become frowned upon to care about what happens to the business five or more years down the road?

Re:It's good to be the king (2, Interesting)

110010001000 (697113) | more than 8 years ago | (#14400720)

It happened about the same time companies started to give unrestricted stock options to the top executives. They can make huge amounts of money in very short periods of time. Take a look at Redhats CEO: he sold over $120 million in unrestricted options in shortly after the IPO. I'm not saying that RHAT's executive staff is doing anything fishy, but the incentive is sure there to boost the short term stock price.

Re:It's good to be the king (0)

Anonymous Coward | more than 8 years ago | (#14400948)

'Effect' is used as a noun. 'Affect' is used as a verb.
-- Dr. Spock, stardate 2822-3.
When did Ben [who2.com] start using the stardate [wikipedia.org] system?

And how does misuse of effect affect early child development or SEC filings?

(Sigs can change so this post AC.)

AddaFee (1)

digitaldc (879047) | more than 8 years ago | (#14400659)

And people wonder why they don't trust the government, the stock market, or anti-virus software to do what is right and correct. They need to run a thorough fraud scan on their accounting software and then quarantine the fraud.

if they're that corrupt (4, Interesting)

Ender Ryan (79406) | more than 8 years ago | (#14400665)

If they're corrupt enough to fuck their shareholders like that, I wonder what other lengths they're willing to sink to. Eg., I wonder if any of the anti-virus vendors actually create viruses themselves, so they can get one up on the competition by having the virus definitions already complete.

I'm not making any accusations, of course, just food for thought. But, with all the corruption in corporate America these days, I'd actually be surprised if something like that hasn't taken place in at least one of the major firms.

Re:if they're that corrupt (3, Interesting)

Monte (48723) | more than 8 years ago | (#14400918)

I wonder if any of the anti-virus vendors actually create viruses themselves, so they can get one up on the competition by having the virus definitions already complete

Not a new theory... IIRC back in the day AV companies would pay a "bounty" if someone came up with a new virus they (or their competition) hadn't seen yet. Thus making it tempting for some one to create a "virus" that may never actually get into the wild, but would score some bounty cash.

Then company "M" could claim to scan for this new "BooBooWooWoo strain 42" before company "N" did, implying their software was better for it.

Re:if they're that corrupt (1, Insightful)

D-Cypell (446534) | more than 8 years ago | (#14400947)

The shareholders only really ended up getting fucked because they got caught. If everything had remained covered then the shareholders would have been quite happy with the situation. Infact, the only reason to do what was done, was to keep the share price high and the holders happy.

what interests me (1, Interesting)

arieswind (789699) | more than 8 years ago | (#14400667)

what interests me is what norton/symantec is going to do, now that (one of) their biggest competitors is in such a position.

Re:what interests me (1)

trogdor8667 (817114) | more than 8 years ago | (#14400731)

Well, I don't know what Norton will do, but I do know what virusscanner I am going to buy tonight, since my McAfee subscription just expired: Trend.

If Norton were smart, they'd rewrite their next version to not be a system hog. That's the main reason I won't use Norton now. If they combined having an ethical company that is well known with a good product, I think McAfee would bite the dust.

well, that's easy... (4, Informative)

Saib0t (204692) | more than 8 years ago | (#14400813)

what interests me is what norton/symantec is going to do, now that (one of) their biggest competitors is in such a position.
Norton/Symantec are now going to do what every good corporation does nowadays.. .. try and find another method to cook their own books since this method seems to be flawed...

Me, cynically...

The age-old intrinsic problem with capitalism (1)

nysus (162232) | more than 8 years ago | (#14400675)

It's always easier and often more profitable to take the money and run then build for the future.

Re:The age-old intrinsic problem with capitalism (1)

BarkLouder (916884) | more than 8 years ago | (#14401016)

What a load of crap!

It's not a problem with capitalism (or more properly called "the free market"), it is a problem with human nature

You don't think there is greed and corruption under other economic systems?

Far more under Communism or Facism!

Re:The age-old intrinsic problem with capitalism (0)

Anonymous Coward | more than 8 years ago | (#14401030)

It's always easier and often more profitable to take the money and run then build for the future.

what do you think makes antivirus companies more money? software that requires a subscription to detect the latest threat or software that does an excellent job of detecting threats that its never seen before? where is the incentive in the security industry to actually solve security problems? capitalism isn't the magic bullet many will claim it is. often it simply creates faceless companies that squeeze nickels and dimes out of consumers instead of improving the process.

Microsoft Rescue? (3, Insightful)

bagboy (630125) | more than 8 years ago | (#14400677)

Seeing as how they (MSFT) are playing the anti-spyware role, maybe McAfee is ripe for a MSFT buyout and integration with Vista?

Re:Microsoft Rescue? (1)

LordSnooty (853791) | more than 8 years ago | (#14400751)

It would make sense... vendor of shonky, hit & miss avnti-virus software bought by vendor of shonky, hit & miss operating systems...

Re:Microsoft Rescue?--Why not (1)

bbernard (930130) | more than 8 years ago | (#14400757)

It makes sense--after all, Microsoft seems to like the biggest, most bloated, least stable versions of software it can find--especailly if they have nice GUI's. Seems McAfee fits the bill on that one. Oh yeah, and now Microsoft can buy them for pennies on the dollar.

Re:Microsoft Rescue? (1)

ScottCooperDotNet (929575) | more than 8 years ago | (#14401183)

It's a little late for integrating new tech into Vista, however Windows OneCare Live beta (U.S. only) [microsoft.com] is Microsoft's latest antivirus offering.

McAfee may have AOL, but I've never had a positive opinion of McAfee simply because I could never find the virus definions file date in their program.

Who else are they lying to, and about what? (1)

bADlOGIN (133391) | more than 8 years ago | (#14400678)

Hmmm... a company that cooks the books so they can lie to shareholders. What other unethical/illegal/standard business practices are they up to?

50 million fine for a 500 million dollar fraud? (5, Insightful)

Anonymous Coward | more than 8 years ago | (#14400679)

No wonder corporate fraud is so popular. Even if you get caught, the cost is less than the benefit.

This will continue until a lot of these people end up in prison for a few decades.

Re:50 million fine for a 500 million dollar fraud? (0)

Anonymous Coward | more than 8 years ago | (#14400845)

not necisarily ... they have made their own bed, and now must lie in it. Shareholders rarely enjoy being screwed over by their investments. The losses that McAffee will occurr will have quite a large impact in future stockholders ... it will amount quickly. The penalty is 50 million - the reprecussions are insurmountable.

Re:50 million fine for a 500 million dollar fraud? (1)

bcattwoo (737354) | more than 8 years ago | (#14400970)

The $500 million is the amount they mistated their earnings by, not how much they actually profited by committing the fraud.

I agree that jail terms or some kind of punishment specically for the officers makes more sense than fining the company and giving the money right back to the investors, who are the ones who really paid the fine in the first place.

Good bye, so long (2, Insightful)

Admiral Frosty (919523) | more than 8 years ago | (#14400680)

Never liked them anyways. 'Stuff was crap.

Re:Good bye, so long (0)

Anonymous Coward | more than 8 years ago | (#14401086)

Just as much as their product is crap, apparently it's the same for their accounting.

Microsoft induced panic (1)

hey (83763) | more than 8 years ago | (#14400695)

They probably figured they needed to do something. After all... a 800 lb gorilla (called Microsoft) just entered their space. So they are screwed anyways.

Irony (1)

(trb001) (224998) | more than 8 years ago | (#14400704)

Sorta ironic...all of our machines here at the SEC building I work at have McAffee virus scan installed. Not having it updated to the most recent virus lists is something that's gotten me kicked off the network at least 3 times.

--trb

Wonder how this was picked up (3, Interesting)

kalpol (714519) | more than 8 years ago | (#14400714)

Since Sarbanes-Oxley has only been in effect since last fiscal year, I wonder if this was caught during a SOX audit or it just got outed on its own.

Re:Wonder how this was picked up (1)

markhb (11721) | more than 8 years ago | (#14400810)

The summary is sadly incomplete. If you RTFA, the fraud in question was uncovered in December 2000 (when NAI missed their earnings), and this is merely the resolution of the resulting investigation. And at least part of the fine money could be distributed to investors.

WTF? (4, Interesting)

Quixote (154172) | more than 8 years ago | (#14400715)

When it caught up with them, McAfee's stock price crashed, wiping out a billion dollars of shareholder capitalization.

If I cause damage worth X dollars, you can bet your ass that I will be forced to repay the amount. And yet these guys get away with paying a nickel per dollar? Shouldn't they be forced to compensate the shareholders for their losses? Take it out of the paychecks of all of the top executives! Throw some in jail! At the very least, take back the money these executives made due to the artificially high price.

Re:WTF? (1)

goombah99 (560566) | more than 8 years ago | (#14400769)

It was paper money. untill you actually sell your shares, the price of the share has no value. If you ad bought at 1$ and it went up to 2$ and then back down to 1$ you have not actually lost 1$. So most of that billion loast came froma fake billion gained. On the other hand a small number of people bid it up to the high value on false pretenses and they indeed did lose when the stock went down. Exactly how much they lost is not clear till they sell.

Nope, it's a real loss (0)

Anonymous Coward | more than 8 years ago | (#14401093)

It was paper money. untill you actually sell your shares, the price of the share has no value. If you ad bought at 1$ and it went up to 2$ and then back down to 1$ you have not actually lost 1$. So most of that billion loast came froma fake billion gained

Tell that to the folks that bought the stock at the higher price, only to watch it collapse into a smoldering pile. True, their loss isn't "realized" until they sell their shares, but their actual monetary loss is quite real. Can't speak for how many shares were purchased above the current price, but you can bet it was plenty and the actual loss is closer to the billion than you think.

Re:WTF? (1)

Control Group (105494) | more than 8 years ago | (#14400874)

CORPORATION (n): An ingenious device for obtaining individual profit
without individual responsibility.

(Ambrose Bierce, I think)

Re:WTF? (0)

Anonymous Coward | more than 8 years ago | (#14400989)

You're ignoring that's $50m is real money, while $1b is stock... Those are completely two different things, and having a 1:20 ratio is actually pretty damn good for an IT corp.

Lets see google with it's ~$80 billion in stock lose 3billion in cash... they'd go bankrupt (with a huge debt behind them). Stock value doesn't mean anything when it comes to -real- money; especially with IT firms.

System Scan Results: (3, Funny)

doit3d (936293) | more than 8 years ago | (#14400717)

....16,284 files scanned. Warning! Unknown file found: CookBooks.exe Do you wish to Quarantine or Delete?

Damn (2, Funny)

c0dedude (587568) | more than 8 years ago | (#14400719)

McAfee cooked its books, overstating its revenues one year by 131%, or half a billion dollars.
Anyone else disappointed it wasn't for making shitty and processor hogging software?

I can't believe they can get away with it (1)

cristij (910332) | more than 8 years ago | (#14400730)

All the recent accounting scandals basically start with artificially incresing the revenues in the books, but from the beginning it is clear that at some point all of it will go down.

In this case, sure they can ship like mad to the distributors, but at some point the distributors are going to stop accepting and sending back the excess supplies. This could only work if demand for their product will dramatically increase in the future, but I doubt they were betting on that.

Given all this I can't understand how the executives of these companies hope they can get away with it. I guess that given all the pressure and stress that they face, their judgement is clouded and they hope for a miracle in the future. I am especially surprised by these methods b/c they generally only work for a very short time. If they worked for 40-50 yrs I could understand why the executives use them.

Honest mistake... (5, Funny)

Andrewkov (140579) | more than 8 years ago | (#14400732)

I hear this was caused by an Excel Marco virus, only McAfee was to embarrased to admit it.

Then why is the stock price up? (2, Informative)

glengineer (697939) | more than 8 years ago | (#14400763)

The death of McAfee is exaggerated. Look at the stock price [yahoo.com]over the last 24 hours: it's up 1 point...

Re:Then why is the stock price up? (1)

DAldredge (2353) | more than 8 years ago | (#14400818)

A major portion of a stocks price has nothing to do with hard numbers, it has to do with how people feel about the stock and a major could of uncertinity has now been lifted. That is why the stock went up.

How come... (1)

squoozer (730327) | more than 8 years ago | (#14400779)

... I can't find a company that want's me to take part in channel stuffing? What a great deal...

  1. Get paid to buy a ton of stock with an agreement not to sell it for x months / years.
  2. Tip off SEC.
  3. Supplying company dies.
  4. Sell stock.
  5. Profit!

Well damn! (1)

WickedClean (230550) | more than 8 years ago | (#14400796)

So much for my three free months of system resource hogging antivirus protection that came with my new PC.

This is yet another reason to go with Trend Micro.

Who cares? (0, Insightful)

Anonymous Coward | more than 8 years ago | (#14400804)

Their software is shit anyway.

Swan Song? (4, Informative)

Bob(TM) (104510) | more than 8 years ago | (#14400812)

Apparently, I missed the analyst gloom/doom forecast. I did see this:

Analysts said the settlement would close a chapter in McAfee's history and let the company focus on its market, which is expected to heat up this year with the entry of Microsoft.

Here's their finance info on Yahoo [yahoo.com]. They seem to have a $4.73B market cap and are currently dead center of their year stock price range.

Doesn't seem that damaging to them, actually - though they are in for a tough scrap when MSFT gets in the act.

McAffee? (2, Informative)

imipak (254310) | more than 8 years ago | (#14400814)

I think you mean Network Associates [nai.com], who bought McAffee years ago. Just after they'd bought Dr Solomon's, in turn, as it happens.

Re:McAffee? (1)

markhb (11721) | more than 8 years ago | (#14400894)

Check your own link... while I think the actual financial misreporting happened during the NAI days, NAI has since been split up and the successor company is, in fact, McAfee [mcafee.com].

A slope vs a cliff (1)

sacrilicious (316896) | more than 8 years ago | (#14400901)

These kinds of antics, while not always as dramatic, are widespread and endemic. Execs can and should be held accountable, but the kinds of incentives to "cram" within the last part of a fiscal period come from the revenue-reporting environment in which companies exist, namely from the cut-off cliff that ends a given fiscal period. I think it'd be a major step forward to get rid of this cliff, and replace it with a slope. For example: let 't' denote a value between 0.0 and 1.0 denoting how far into the current fiscal period the company is. Any booking made at time t is booked in the current period by multiplying by (1.0-t), and the remaining fraction is reported in the NEXT period. Cubic, non-linear curves could be used, but the point is that this would avoid the all-to-common situations of salesmen frantically calling in favors during the last few hours of any given period.

Eat more Dead Meat (-1, Troll)

Anonymous Coward | more than 8 years ago | (#14400906)

Eat me

Easy fix for their "swan song" (0)

Anonymous Coward | more than 8 years ago | (#14400907)

Just release a bunch more viruses into the wild to increase FUD and pump up sales.

Good riddance (2, Interesting)

fuentes (711192) | more than 8 years ago | (#14400915)

I've been disgusted with McAfee for a while, but I finally had enough when my parents got a new Dell recently (which ships with McAfee for some configurations).

I installed Firefox and made it the default browser. Then I tried to configure some of the advanced McAfee antivirus options. First, I couldn't even open the interface because McAfee must use IE (with ActiveX) to produce the GUI. Since Firefox was set as default, McAfee just spun and spun fruitlessly until I realized what was happening.

Then, my last name has an apostrophe in it. Alas, McAfee cannot launch the AV scheduler if your logged in user name (on XP Home) contains an apostrophe. That took a LONG time with a McAfee tech to figure out.

Never again. Crappy software for a crappier company.

Good (0)

Anonymous Coward | more than 8 years ago | (#14400984)

Good, I hate seeing machines with McAffee, id say there software is worse than the virii and spywares that its designed to delete.

(nothin like in the middle of CS and getting a pop-up to tell me that I have a virus it cant delete over and over and over again)

GO AVG

Accounting Fraud Detection & Protection (1)

DanMc (623041) | more than 8 years ago | (#14400990)

I bet there's a market for a little windows program that sits in the system tray and monitors the revenues and accounting trends of a particular company. It could match the trends and heuristics of the financials against known trouble patterns. When something suspicous is detected it could pop up a warning, or ask the user what they want to do.

Shouldn't the fine fit the crime? (0)

Anonymous Coward | more than 8 years ago | (#14401180)

1. McAfee cooked its books, overstating its revenues one year by half a billion dollars, or 131%.

2. When it caught up with them, McAfee's stock price crashed, wiping out a billion dollars of shareholder capitalization.

3.McAfee has agreed to pay a fine of 50 million dollars stemming from false SEC filing.

Surely, $50M will be more than enough to compensate the shareholders for a billion dollars of losses... ha-ha.

Suckers wanted! Apply at your local stock exchange today!
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