Shares in RSA Security have fallen sharply following the news that US regulator the Securities and Exchange Commission (SEC) is investigating the company's past accounting practices.
RSA stock dropped to $11.86 after the trading of 17.3 million shares, more than eight times the three-month daily average.
The company said in a filing that the SEC "has commended a formal investigation into certain matters relating to the company and trading in its securities".
RSA officials explained that the SEC is scrutinising the manner in which the firm disclosed its first-quarter change to revenue recognition.
"The SEC has not concluded that there has been any wrongdoing on our part, and we don't believe there has been any wrongdoing on our part," said Art Coviello, RSA chief executive, in a conference call with analysts.
He added that RSA has a growing number of large deals, including deferred projects, and that the government sector would provide a large opportunity for the company.
In one of the firm's quarterly filings with the SEC last year, RSA disclosed a change to its accounting methods and said it had started "recognising revenue upon shipment to distributors rather than upon sell-through".
The practice results in revenues being recorded earlier than they are received.
RSA, which was informed of the investigation on the eve of the announcement of its fourth-quarter results, said it is co-operating fully with the SEC.
The company reported a fourth-quarter loss of £7.2m ($10.1m), or 18 cents a share, compared with net income of £73.8m ($103.9m), or $1.70 a share, a year ago.
Sales fell 19 per cent to £44.8m ($63m), less than the £45.4m ($64m) average estimated in a survey of analysts by First Call.
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