MicroStrategy execs to pay $11 million to settle charges

Three executives settle regulators' fraud charges that they caused the data-management software company to inflate its financial results for 21 months.

WASHINGTON--Three MicroStrategy executives agreed Thursday to pay about $11 million to settle regulators' fraud charges that they caused the data-management software company to inflate its financial results for 21 months.

Michael Saylor Michael Saylor, MicroStrategy's chief executive and co-founder, agreed to pay $8.6 million of the total to settle the Securities and Exchange Commission charges. Chief operating officer Sanjeev Bansal and former chief financial officer Mark Lynch also settled the charges. The former will pay $2 million, and the latter will hand over $480,000.

MicroStrategy shares have tumbled about 95 percent from a 52-week high of $333 on March 10, after the company revised its books to comply with accounting rules regarding when sales can be listed as revenue.

Vienna, Va.-based MicroStrategy, which combs through databases and delivers customized information to companies, itself also settled SEC charges by agreeing to be subject to stiffer sanctions if it commits similar violations again.

The SEC alleged that the executives caused the company to report net profits between June 1998 and March 2000 when in fact the company incurred losses. MicroStrategy said in March it was restating 1998 and 1999 results.

The executives, without admitting to or denying the allegations, agreed Thursday to pay a total of $1 million in fines and to surrender $10 million to the government, the SEC said.

Lynch also was barred from practicing as an accountant for a public company. He can reapply after three years.

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.''

The company has instituted "numerous organizational and business measures to safeguard the integrity of our finances,'' he said.

MicroStrategy's auditor was PricewaterhouseCoopers, the largest U.S. accounting firm. The SEC said its investigation is continuing.

Copyright 2000, Bloomberg L.P. All rights reserved.

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