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Security Vendor McAfee to Pay $50 Million Fine
Posted by
Zonk
on Thu Jan 05, 2006 10:56 AM
from the do-the-crime-pay-the-fine dept.
from the do-the-crime-pay-the-fine dept.
goombah99 writes "RedHerring.com reports that Security Vendor McAfee has agreed to pay a fine of fifty million dollars stemming from false SEC filing. McAfee cooked its books, overstating its revenues one year by 131%, or half a billion dollars. The method employed was 'channel stuffing' in which compliant re-sellers are effectively paid to buy and hold inventory they may never sell. The shipped goods are booked as revenue and the payments disguised in the books. When it caught up with them, McAfee's stock price crashed, wiping out a billion dollars of shareholder capitalization. The story quotes an analyst saying this maybe the swan song for the once dominant vendor."
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McAfee Anti-Virus Causes Widespread File Damage 353 comments
AJ Mexico writes, "[Friday] McAfee released an anti-virus update that contained an anomaly in the DAT file that caused many important files to be deleted from affected systems.
At my company, tens of thousands of files were deleted from dozens of servers and around 2000 user machines. Affected applications included MS Office, and products from IBM (Rational), GreenHills, MS Office, Ansys, Adobe, Autocad, Hyperion, Win MPM, MS Shared, MapInfo, Macromedia, MySQL, CA, Cold Fusion, ATI, FTP Voyager, Visual Studio, PTC, ADS, FEMAP, STAT, Rational.Apparently the DAT file targeted mostly, if not exclusively, DLLs and EXE files." An anonymous reader added, "Already, the SANS Internet Storm Center received a number of notes from distressed sysadmins reporting thousands of deleted or quarantined files. McAfee in response released advice to restore the files. Users who configured McAfee to delete files are left with using backups (we all got good backups... or?) or System restore."
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Apple: McAfee Feigns Fear at Mac Security 403 comments
conq writes "BusinessWeek reports that McAfee has just come out with a report which asks the question 'Is Mac OS X the Next Windows?'." They appear to be attempting to scare consumers into buying anti-virus software for OSX. Blogger Arik Hesseldahl breaks down their claims: "First off, Mac users on average pay more for their computers, are self-selected because they tend to know more about technology than your average PC buyer, and by and large are a bit more affluent than those who buy cheapo commodity Windows PCs ... When you take into account the ongoing growth in general PC ownership, even if Apple pushes its annual unit sales to 12 million or more by 2010, its share of the overall market will still account for about 4%, leaving Windows the far more tasty target."
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Oh, what a... (Score:5, Funny)
Re:Oh, what a... (Score:5, Insightful)
Parent
Re:Oh, what a... (Score:3, Interesting)
Re:Oh, what a... (Score:3, Informative)
I got completely fed up. Ripped that bitch outta my system, and am using AVG now. No complaints. I'll never use Norton or McAfee again.
Re:Oh, what a... (Score:4, Funny)
Parent
Re:Oh, what a... (Score:5, Interesting)
Furthermore, I've had cases where their antivirus would keep the anti-spam from working and thus mail would never get delivered. It would just sit there fighting each other. Let's not even talk about the thousands of machines that come into my shop that won't even boot because McAfee is damaged. Boot into safe, uninstall McAfee and the system will boot properly.
I don't disagree that you would see McAfee for years after it's gone (by whatever method), but that's partly because of the poor way they keep the customer informed and handle the account/licensing. Their products are in desperate need of a complete revamping. I even get about 300 "spam from your network" emails because of their crap client a day. Not a single one of them come from my ISP, they just spoof an email address on domains run/hosted by us or spoof our domain in the EHLO statement.
That's not to say Symantec is any better. Up until the 2006 version I was pleased with Norton, but now it's just so in your face that you have to wait 5 minutes after boot up before really doing anything because of a popup screen that says "Norton is up and working properly" kind of crap and will sit there for 30 seconds or until you physically close the window yourself. I've had quite a few times their stupid little popups gets right in my way, or even kicked me out of a game I was playing
Mainstream AV is too intrusive (but I can understand why since users just keep ignoring what it's saying) and in several cases ineffectual. They are all bringing a false sense of security and allow users to think they don't still have to follow good security on their own like....I don't know....not opening email attachments they aren't expecting.
On that note, I'll bet money on the fact that more than 70% of the computers that were infected with the most recent outbreak of the sober virus were all computers purchased with McAfee OEM with only 90 days of service and probably half of those weren't even activated the other half were unknowingly (or uncaring) expired. Gotta love it when OEMs use McAfee as the default OEM product by default.
The thing to remember about nag screens, they are there for a reason. Users always "oh, I just clicked close on that" and then complain about "why do I get viruses", "why do people do that", "is there anything I can do to go after these people?", and my personal favorite "what can I do to keep this from happening again?".
Parent
Re:Oh, what a... (Score:4, Interesting)
I've noticed when people have the fancy Norton Security Suites installed, they tend to disable them because it makes it too annoying to browse the internet, for example. You get psychotic firewall notifications every few seconds, and it doesn't really remember what applications are safe, so it bothers you over and over for the same damn program.
It's that funny thing with security...The best security is so restrictive that people ignore it and disable it whereever possible...Like requiring 10 digit passwords, changed monthly...those damn things are always written on a sticky, stuck under the keyboard.
Parent
Re:Oh, what a... (Score:3, Insightful)
notification: "Your Norton needs to update some of it's pro
Re:Oh, what a... (Score:3, Insightful)
And you KNOW why it ends up being that way ? Two reasons....
1. The bloody OS is a more porous than a sponge for all sorts of junkware.
2. Because they ( the Symantecs, and McAfee's of the world ) feel that they have to demonstrate blantantly to the user "Look how useful I am to you !! Look at me !!", so that they can try to justify in the user's minds the ridiculously overpriced license fees they charge for every nickel and dime piece of glopware they plaster your PC with.
Re:Oh, what a... (Score:5, Informative)
Parent
wtf? (Score:5, Funny)
Yes, it is what Enron did. (Score:3, Informative)
Yes, Mark-to-market is what Enron did [stanford.edu]:
"As McLean pointed out, her Fortune article, "Is Enron Overpriced?" appeared in March 2001. Yet in 1993 an article in Forbes sharply questioned Enron's troubling mark-to-market accounting for assets, which claimed profits for investments long before it was clear that they would in fact evolve. A few years later, an article in Fortune again signaled concern."
Re:Yes, it is what Enron did. (Score:3, Informative)
http://executivecaliber.ws/sys-tmpl/offbalanceshee tfinancing/ [executivecaliber.ws]
http://www.investopedia.com/articles/analyst/02200 2.asp [investopedia.com]
http://www.investopedia.com/articles/stocks/04/102 004.asp [investopedia.com]
Re:Yes, it is what Enron did. (Score:5, Funny)
Why limit yourself to just one.
Parent
Re:wtf? (Score:4, Informative)
http://www.billparish.com/msftfraudfacts.html [billparish.com]
Financial Pyramid Building Techniques Being Used by Microsoft:
"Stock option programs are an excellent benefit and many companies use them responsibly. At Microsoft, however, stock option accounting is only one of its many pyramid building techniques, what could be called a cash generating component. Additional pyramid building techniques include the following. It is important to note that the genius of the pyramid scheme is to leverage share growth from investors using a passive investment approach based upon indexing to the S&P 500. Most smaller and mid size technology firms are not in the S&P 500 and therefore are locked out of this key aspect of the pyramid from the beginning.
and there's more. This accountant outlines 12 things Microsoft did and then describes the effects on our economy of those 12 things.
Parent
Fines are not enough (Score:5, Interesting)
Wait just a minute (Score:5, Funny)
Hey, wait just a second. Leave the poor CTO out of it :-)
Parent
Re:Fines are not enough (Score:3, Insightful)
I thought this what Sarbanes-Oxley was supposed to do. Anyone more knowledgeable than I know for sure?
Re:Fines are not enough (Score:4, Insightful)
Parent
Re:Fines are not enough (Score:3, Insightful)
Who are the people that voted the executives into their jobs?
The more shares a holder owns, the more responsible they are for putting these yahoos into these positions to begin with, and the more their bottom line should hurt. Don't like it? Don't invest; that will certainly clean things up in corporate board rooms.
Re:Fines are not enough (Score:5, Insightful)
Dude, you don't know what the hell you're talking about. Corporations shield their owners from bankruptcy and civil courts (to an extent). They do not shield the officers of those corporations from criminal charges. Just ask Enron Chief Accountant Richard Causey [cnn.com], who's serving seven years in jail for his role in the corporation's implosion. His old bosses, Ken Lay and Jeffrey Skilling, are about to get their day in court in the next few months, too. If they can find an impartial jury, that is (if they're smart, they'll try to plead out, but if they were smart they wouldn't have cooked the books in the first place...but that's another story).
I don't know where this myth of corporations protecting people who out-and-out break laws came from, but it's not in the least bit grounded in reality. The cases where corporate executives get away with murder, figuratively and literrally, have more to do with state corruption than the legal fiction behind the "corporate veil". The infamous Union-Carbide tragedy was as much an exemplar of the corruption in certain parts of the Indian government as it was the amorality of company officials.
Parent
One of the oldest (Score:4, Funny)
The method employed was 'channel stuffing' in which compliant re-sellers are effectively paid to buy and hold inventory they may never sell.
I think there should be class in 'B' school called, "Accounting Tricks That Get You In Trouble with the Law: You're not as smart as you think you are."
Re:One of the oldest (Score:2)
Re:One of the oldest (Score:4, Insightful)
http://www.dsbcpas.com/services/accounting/audit/
Notice that fraud is NOT included in the opinion. The idea of fraud is to go undetected, and you cannot audit for collusion. Therefore, unless the environment suggests fraud is taking place, fraud is discovered by the company or auditor in the normal course of operations or the audit, or if the company reports to the auditor that fraud is taking place, it is extremely difficult to audit for fraud, if not impossible.
The following link is to the auditing standards by the AICPA
http://www.aicpa.org/members/div/auditstd/auditin
See:
SAS 1 - Responsibilities and Functions of the Independent Auditor
SAS 99 - Consideration of Fraud in a Financial Statement Audit
Parent
It's good to be the king (Score:2, Interesting)
AddaFee (Score:2)
if they're that corrupt (Score:5, Interesting)
I'm not making any accusations, of course, just food for thought. But, with all the corruption in corporate America these days, I'd actually be surprised if something like that hasn't taken place in at least one of the major firms.
Re:if they're that corrupt (Score:3, Interesting)
Not a new theory... IIRC back in the day AV companies would pay a "bounty" if someone came up with a new virus they (or their competition) hadn't seen yet. Thus making it tempting for some one to create a "virus" that may never actually get into the wild, but would score some bounty cash.
Then company "M" could claim to scan for this new "BooB
Re:if they're that corrupt (Score:3, Funny)
If you believe any of that... I'm very worried...
what interests me (Score:2, Interesting)
well, that's easy... (Score:5, Informative)
Me, cynically...
Parent
The age-old intrinsic problem with capitalism (Score:2)
Microsoft Rescue? (Score:4, Insightful)
Who else are they lying to, and about what? (Score:2)
50 million fine for a 500 million dollar fraud? (Score:5, Insightful)
This will continue until a lot of these people end up in prison for a few decades.
Good bye, so long (Score:2, Insightful)
Microsoft induced panic (Score:2)
Wonder how this was picked up (Score:3, Interesting)
WTF? (Score:5, Interesting)
If I cause damage worth X dollars, you can bet your ass that I will be forced to repay the amount. And yet these guys get away with paying a nickel per dollar? Shouldn't they be forced to compensate the shareholders for their losses? Take it out of the paychecks of all of the top executives! Throw some in jail! At the very least, take back the money these executives made due to the artificially high price.
Welcome to earth (Score:4, Interesting)
Shouldn't they be forced to compensate the shareholders for their losses?
No. No, they shouldn't. The shareholders bought the stock hoping it would go up. It went down. The shareholders factored in various kinds of risk -- market risk, credit risk, compliance risk. Looks like they should have allowed more for compliance risk in this case, but that's life.
Are you suggesting that whenever a stock goes down because of human stupidity/greed/malice, investors who were holding it at the time should be compensated?
What about when a stock goes up? Should investors with short positions, be compensated?
Who should do the compensating? I don't think McAfee has that kind of money now.
I think it might be a lot simpler and fairer to just expect investors to take responsibility for their own investments.
I also think that it's pretty fucking sad that the above is no longer intuitively obvious to everyone.
Parent
Ahhh, but what you've missed... (Score:3, Informative)
Now, had the fall in stock price been for some exterior means. For example, all the virus writers in the world burst into flame and the viruses in the wild mysterious
System Scan Results: (Score:3, Funny)
Damn (Score:3, Funny)
Anyone else disappointed it wasn't for making shitty and processor hogging software?
Honest mistake... (Score:5, Funny)
Swan Song? (Score:4, Informative)
Analysts said the settlement would close a chapter in McAfee's history and let the company focus on its market, which is expected to heat up this year with the entry of Microsoft.
Here's their finance info on Yahoo [yahoo.com]. They seem to have a $4.73B market cap and are currently dead center of their year stock price range.
Doesn't seem that damaging to them, actually - though they are in for a tough scrap when MSFT gets in the act.
McAffee? (Score:3, Informative)
SENSATIONALISM (Score:5, Informative)
All of what you know as McAfee used to be called Network Associates up until about 2004. It was formed in 1998 by a massive buy-up of various software firms, including Network General and McAfee Associates - hence the name, "Network Associates." During this reign, the CEO committed the fraudulent acts, including the channel stuffing as indicated, and was eventually fired in 2000 or 2001 for fraud. The new CEO, George Samenuk, took over and has since been credited with turning the company around, reestablishing the McAfee brand identity, focussing on the core products, cutting loose various deadwood (including, unfortunately, the research group that I worked for), and returning the company to legitimate profitability. At an all-hands (the one time Samenuk braved a visit to us research dweebs), he explained that the old regime consisted of "crooks," and that he vowed to be forthright with the SEC and do his personal best to fly straight. To my knowledge, he has done a good job of that ever since.
This fine being reported today is a result of the SEC, acting in good government swiftness, merely enforcing a punishment for deeds done in the past, under different leadership. Take this news as no indication of the current state of the company or its leadership, but view it merely as a capstone to an unfortunate period in McAfee's history.
That explains that math (Score:3, Funny)
Just converted... (Score:3, Interesting)
Yes, I can tell that PC-cillin also appears to use Active X for manual updates (would love to be corrected), but, in my case, the auto update works well, so there is no need to use the manual update. And I personally believe that the Trend Micro labs are quicker on the draw on new viruses and trojans, which, in the end, is what I pay for.
As someone said to me in '89.... (Score:3, Funny)