The SEC requested information from CA after the company issued an earnings warning in July 1998 that sent its shares dramatically lower at the time. The company learned that six employees were asked by the SEC to produce documents relating to their trading activity of CA stock prior to the warning, company spokesman Bob Gordon said Thursday.
CA stock tumbled more than 32 percent after the profit warning, a drop the company had attributed to tough conditions in Asia and some order delays linked to fixing the much-hyped Year 2000 bug.
The employees under investigation do not hold executive-level positions, and only five of the six still work for the company. CA said it believes the employees are not guilty of any wrongdoing since they were not in the position to have had access to the financial information before it went public. No corporate officer or director was the subject of the probe, the company said.
In recent weeks, CA has undergone public scrutiny over possible holes in its accounting practices. Following a published report that questioned whether the company is reporting legitimate revenue and profit growth, the software maker held a Web broadcast to defend its business and accounting practice.
The New York Times, which published the article, reported that CA has consistently overstated revenue and earnings for years.
The company's software manages large corporate mainframe systems and networks. CA, based in Islandia, N.Y., also sells software for data storage and computer security.
In a May 4 SEC filing, the company corrected a typo in its preliminary financial results statement, which boasted a healthy quarter and strong outlook. Reported diluted operating earnings per share for the year ended March 31 should have read 16 cents rather than 40 cents as stated in the previous month's announcement, the company noted in the filing.
The investigation is still active. Just last month, the SEC requested additional information from CA regarding trading activity by the employees. The company said it agreed to give the information voluntarily except for personnel records, for which it is requesting a subpoena in order to safeguard the privacy of its employees.
That information was given to the SEC on April 16, 2001. CA has not heard from the SEC since. The company, which has seen its shares fall to a 52-week low of $18.12, is slated to release fourth-quarter results May 22.