Informix closes file on SEC fraud probe

Informix finally closed the book on allegations of fraudulently inflating turnover and profit last week, after reaching a settlement with the US Securities and Exchange Commission (SEC).

Informix finally closed the book on allegations of fraudulently inflating turnover and profit last week, after reaching a settlement with the US Securities and Exchange Commission (SEC).

The SEC claimed that Informix, through former employees, made false and misleading filings between 1994 and the first quarter of 1997, which bumped up sales and profit by $295m (£179.2m) and $244m respectively.

It also accused former Informix managers of attempting to avoid restating the figures as the alleged activities came to light. The figures were restated after the former management team was replaced in a series of shake-ups in the middle of 1996. But by then Informix and its auditors had uncovered more than $100m of "accounting irregularities", according to an SEC statement.

The investigation eventually led to the restatement of Informix's financial figures in November 1997. As a result, almost $240m in profit was wiped out and a string of class-action lawsuits ensued. Last May, Informix agreed to pay several shareholders $142m in settlements. But the vendor has never denied or admitted the allegations.

The SEC imposed no fines or penalties on the database specialist, but the vendor has agreed to pay 'very severe' fines if any future violations occur.

Bob Finocchio, chairman of Infor-mix, said in a statement: "The company is gratified to have resolved the investigation.

"Its resolution, and the recently announced settlements of the private securities litigation, mean the company can now concentrate on the future."

But the SEC will continue to investigate some former executives and others related to the case, according to Informix attorney Gary Lloyd.

The vendor said it will continue to co-operate with the ongoing investigation.

"We are relieved the investigation is over," said Lloyd.