The suit, believed to be the first to charge that a software maker overstated the capabilities of a Year 2000 repair tool, alleges that from 1997 through 1999, Accelr8, its chief executive Thomas Geimer, president Harry Fleury and controller James Godkin made false claims about the utility of its Navig8 2000 software, Reuters reported.
The executives are also accused of submitting false financial reports to the SEC during a one-year period that ended April 1999, according to the suit filed in federal court in Denver.
The SEC's action seeks an injunction against future violations of the reporting and anti-fraud provision of the federal securities law.
The SEC alleges Navig8 2000 was created to analyze computer programs only for the VAX/VMS computer system made by Digital Equipment, which was bought by Compaq Computer in 1998. The company claimed the software addressed Y2K issues for IBM and Microsoft products as well, according to the suit.
The company's lawyers dispute the charges, saying Accelr8 has always properly represented the capabilities of its products and feels its accounting practices are appropriate.
"We have a dispute with the SEC about the proper application of accounting standards," Simon Krauss, Accelr8's corporate counsel, said in a statement. "Our auditors and a former SEC accounting expert hired by us as a consultant have concurred in the reasonableness of our accounting decisions. Unfortunately, the SEC has the power to claim that anyone with whom they disagree has committed fraud, and has done so in this case."
No trial date has been set.