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The latest in a string of tech accounting scandals drew to a close Wednesday, when PricewaterhouseCoopers agreed to pay $55 million to settle a class action. A number of MicroStrategy shareholders had filed the suit against the blue-chip accountancy firm, accusing it of defrauding them when it signed off on an audit of the software maker. In late March 2000, MicroStrategy had said that it would restate its 1998 and 1999 results. As a result of the revision, the profits that the company had previously reported evaporated; it turned out that the company was actually losing money. In April 2000, the company announced that the Securities and Exchange Commission was investigating the way it recorded revenues. PricewaterhouseCoopers denies that it did anything wrong in its audit, saying only that it has “made a business decision to settle in order to avoid the further costs and uncertainties of prolonged litigation.” The SEC has been putting the large accounting firms under increasing scrutiny. Last year, the SEC required accounting firms performing audits to disclose any consulting contracts the firms may have signed with the businesses they were auditing. Analysts worry that such contracts could tempt accounting firms to go easy on clients during an audit. According to the Washington Post, plaintiffs in the case against PwC alleged that the firm made money by selling MicroStrategy’s software, and that it also mulled setting up a business with its client. Two companies, Cendant and Sunbeam, recently had to restate their earnings after SEC reviews. Ernst & Young ended up paying $335 million to settle charges brought by Cendant’s shareholders, and Arthur Andersen agreed last week to pay $110 million to shareholders suing over its work for Sunbeam. MicroStrategy was not immediately available to comment. In December, three of the company’s top executives settled SEC fraud charges, without admitting or denying wrongdoing, for a little more than $11 million. Related Articles from The Industry Standard: Chinese Hackers Call Truce in China-U.S. Cyberwar 3-Year-Long Cyberattack Reveals Cracks in U.S. Defense China’s Datang Denies Getting Lucent’s Data Copyright (c) 2001 The Industry Standard

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