Petrone
Petrone v. Malone
Opinion
Opinion
FACTS AND PRIOR PROCEEDINGS
The Underlying Case
This case stems from the settlement of a class action on behalf of all persons or entities who purchased publicly traded securities of VERITAS Software Corporation between Janu- ary 3, 2001 and January 16, 2003. The complaint alleges that VERITAS falsely represented that it had entered a $50 mil- lion deal with AOL, structured to appear as if VERITAS had sold $50 million in software and services to AOL and had purchased $20 million in online advertising from AOL. This “roundtrip” transaction allowed both companies to artificially inflate their revenues and earnings.
On November 14, 2002, VERITAS for the first time revealed in a Form 10-Q that it had been served with a sub- poena by the Securities Exchange Commission three months 9028 IN RE VERITAS SOFTWARE CORP. earlier requesting documents related to the transaction with AOL. The company also stated that it was reviewing its accounting treatment of the transaction.
On January 17, 2003, VERITAS restated its financials for fiscal years 2000 and 2001 to eliminate the improper recogni- tion of approximately $20 million in revenue from the AOL transaction.