Shares of RSA Security Plunge On News of SEC Investigation

[R. A. Hettinga]

http://online.wsj.com/article_print/0,4287,SB101199526610000000,00.html




January 25, 2002
Shares of RSA Security Plunge
On News of SEC Investigation
CEO Says He Doesn't Expect
Any Restatement of Financials

By WILLIAM M. BULKELEY
Staff Reporter of THE WALL STREET JOURNAL

COMPANIES
Dow Jones, Reuters
RSA Security Inc. (RSAS)
PRICE
CHANGE
U.S. dollars	11.86
-4.78
1/25
 
* At Market Close

RSA Security Inc. shares plunged Friday, after the provider of
network-security products and data-encryption software disclosed it is the
target of a Securities and Exchange Commission investigation.

Shares of RSA fell $4.78, or 29%, to $11.86 in 4 p.m. trading on the Nasdaq
Stock Market.

Arthur Coviello, chief executive officer of RSA, said in an interview that
the company doesn't anticipate "any requirement to restate financials" as a
result of the Securities and Exchange Commission inquiry.

Mr. Coviello said that the SEC investigation involves a question of whether
it should have disclosed in a press release certain information about
changes in estimates for shipment to distributors. RSA limited the
disclosure to a regulatory filing last spring after the first quarter.

Mr. Coviello said the SEC is also looking at certain issues about trading
in RSA's stock. He said he doesn't know the details of the investigation,
but "We don't believe the company has anything to do with these other
trading issues." He cautioned that "I don't really have all the facts at my
disposal," but he said, "We absolutely believe there's no wrongdoing." He
added, that RSA management is cooperating fully with the SEC.

Later Friday, the company issued a statement (see statement0) saying that
the investigation wouldn't require any change to RSA's financial statements.

Mr. Coviello said that the amount involved in the accounting treatment was
about $3 million, which is less than 2% of RSA's 2001 revenue of $283
million.

A spokeswoman said that RSA hadn't mentioned the SEC investigation in the
press release about earnings Thursday on advice of counsel. Mr. Coviello
added that he hadn't seen any SEC notification but had heard about it from
counsel.

Write to William M. Bulkeley at bill.bulkeley at wsj.com1
------------------------------------------------------------------------

RSA Statement

RSA Security Issues Clarification on SEC Investigation
BEDFORD, Mass., Jan. 25 -- RSA Security Inc. today reported that the
Securities and Exchange Commission has commenced a formal investigation
into certain matters relating to the company. The SEC's investigative order
relates to whether a change in RSA Security's method for estimating
distributor revenue disclosed in its Quarterly Report on Form 10-Q for the
first quarter of 2001 should have been disclosed in its earnings press
release a few weeks earlier, as well as to certain trading in the company's
securities. The investigation will not require any change to RSA Security's
financial statements.

"The SEC has not concluded that there has been any wrongdoing, and we don't
believe that there has been any," said Art Coviello, CEO and president at
RSA Security. "We are cooperating fully with the SEC on this matter."
URL for this article:
http://online.wsj.com/article/0,,SB101199526610000000.djm,00.html
Hyperlinks in this Article:
(1) mailto:bill.bulkeley at wsj.com

Updated January 25, 2002 5:47 p.m. EST

Copyright 2002 Dow Jones & Company, Inc. All Rights Reserved
Printing, distribution, and use of this material is governed by your
Subscription agreement and Copyright laws.
For information about subscribing go to http://www.wsj.com
-- 
-----------------
R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'



---------------------------------------------------------------------
The Cryptography Mailing List
Unsubscribe by sending "unsubscribe cryptography" to majordomo at wasabisystems.com