Executives of software supplier MicroStrategy have agreed to pay about $11m to settle fraud charges relating to a restatement of the company's financial results for 21 months.
Without admitting or denying the charges, co-founder and chief executive Michael Saylor agreed to pay $8.3m of the total to settle the US Securities and Exchange Commission (SEC) charges.
Chief operating officer Sanjeev Bansal agreed to pay close to $2m, while former chief financial officer Mark Lynch will pay $480,000.
MicroStrategy said the $11m will be made up from shares in the company that the executives are contributing as part of a resolution of shareholder lawsuits filed after the restatement.
The SEC alleged that the three senior executives caused MicroStrategy to prematurely book revenue and report net profits when in fact, the company incurred losses between its initial public offering in June 1998 to March 2000.
On 20 March 2000, MicroStrategy said it intended to restate its financial results for the fiscal years 1998 and 1999. The company's stock, which had reached a high of $333 per share, dropped by more than 60 per cent of its value in one day - going from $260 per share to close at $86 per share on 20 March. The stock closed on Friday at $14.
Richard Walker, the SEC's director of enforcement, said: "The case illustrates how critical it is for all companies to implement effective internal controls and to strictly adhere to the letter and the spirit of the accounting rules for revenue recognition."
According to the SEC, MicroStrategy agreed to a so-called cease-and-desist order and promised to make "significant" internal changes to ensure that it complies with securities laws in the future.
In a statement Saylor said: "Given our desire to put the restatement behind us and move forward in our business, this is a welcome outcome.
"By removing the diversions and uncertainties associated with this inquiry, senior management will be able to focus all of its time and attention on the exciting opportunities in the business intelligence market."
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