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SEC probes Ariba over restatement
E-procurement and spend management company Ariba Inc is now the subject of an informal investigation by the SEC following news that the Sunnyvale, California-based company will have to restate its fiscal 2000 figures and 10 quarters of results. Ariba hopes to complete its own inquiry into the figures by the end of February and warns that this could lead to further restatements.
The restatements involve payments and air travel that was provided by chairman and co-founder Keith Krach that should have gone through the company's books, though this would have increased its expenses. Stock options issued to executives at companies acquired by Ariba had also been excluded from the accounts.
The consequences could be enormous because Ariba will have to battle a delisting by Nasdaq because of late filing of its annual 10K filing, and inevitably faces a class action lawsuit over the restatement.
All this is a dangerous distraction for a software company fighting to win business from customers reluctant to spend. It did however manage to start its financial year with modest growth. In the first quarter to December 31, the net loss was $55.9m, down from a restated loss of $157.7m on revenue up 12.3% at $62m.