i2 faces SEC investigation

i2 faces SEC investigation

Troubled supply chain software maker i2 Technologies has confirmed that the U.S. Securities and Exchange Commission (SEC) is now probing its finances. Earlier it had announced yet another quarterly loss.

The company said the SEC had opened an "informal inquiry" into its 2000 and 2001 financial reporting. A spokesperson said the SEC notified i2 in December that it was going to launch the investigation. It is still pending.

The SEC is following up on i2's own quarterly 10Q filing from last November in which i2 announced it was conducting a reaudit of its finances.

A company's 10Q - as filed with the US Securities and Exchange Commission (SEC) - differs from its basic quarterly report in that it contains more detailed financial information with a more comprehensive description of its business, business risks and uncertainties.

That move was prompted by two former i2 vice-presidents, Reagan Lancaster and Claudio Osorio, who had complained to the board of directors about a wide variety of improprieties. According to the 10Q filing, the allegations included bad accounting and revenue-recognition procedures and inadequate financial controls.

An internal audit committee found the allegations to be groundless, but i2 ordered its own external auditor, Deloitte & Touche, to reaudit the numbers as well.

i2 CEO, Sanjiv Sidhu, did not expect the company's financial picture to change dramatically. "There is the possibility of readjustment to those numbers," he said.

The company would have presented its quarterly financial report yesterday only if it had basic comfort in the figures stability, he said.

Gartner analyst Karen Peterson was upbeat about i2's fortunes.

"The SEC inquiry is informal, so there is no major investigation at this time," she said. "While this could defocus i2, it should have little effect on the user base. Actually, the news of a reaudit has masked the fact that i2 actually did better than expected last quarter, good news for users that are counting on i2 to be around for years to come."

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