Unconfirmed news reports had surfaced earlier last week claiming CA was under investigation regarding accounting practises but until Friday last week, the company had maintained it did not know of any ongoing investigation.
That changed on a conference call, when top CA executives confirmed that both the SEC and the US attorney’s office had begun preliminary investigations into the company’s accounting practices.
‘Our outside legal council have contacted the US attorney and the SEC and they have confirmed they have some form of inquiry ongoing and we have asked to meet with them both,’ said CA president and chief executive Sanjay Kumar.
Kumar maintained CA was eager to assist both inquiries as a way to end investor concerns as quickly as possible. ‘We’d like to know what’s going on. We’re very eager to provide them with whatever information that they need to dispel this cloud that’s hanging over us.’ In addition, he said that CA had no information regarding the size or the scope of the inquiries.
He added: ‘We have been prodded and poked about our accounting in the past and we look forward to clearing up any confusion again.’
Reports maintain that the federal inquiry is looking to establish whether the company deliberately overstated profits to inflate its stock price and enrich senior executives.
The news sent the company’s share price crashing. It fell by more than 15% to close the week at $15.99.
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