PwC to Pay $55 Million in Class Action Suit
Big Five firm PricewaterhouseCoopers has been embroiled in a lawsuit with MicroStrategy Inc. for over a year, while the SEC has been investigating independence issues surrounding the relationship between the two companies.
In a class action suit filed early last year, investors sued MicroStrategy and PwC after MicroStrategy adjusted two years of financial statements to conform to SEC guidelines on reporting revenue in the software industry.
In settlement of the lawsuit, PricewaterhouseCoopers has agreed to pay $55 million to MicroStrategy investors.
When the original financial statements were retracted, MicroStrategy stock dropped 62 percent in one day, leaving shareholders holding the bag. Stock that was once valued as high as $226.75 per share was selling for $5.22 per share this week.
The SEC claimed that MicroStrategy included revenues on unsigned deals in its earnings and recognized revenue up front for long-term contracts instead of spreading the revenue over the life of the contracts.
PwC denies any wrongdoing in the audits performed for MicroStrategy. The firm has declined to explain how MicroStrategy's accounting practices got past auditors.
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