U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20178 / July 2, 2007

Accounting and Auditing Enforcement Release No. 2631 / July 2, 2007

SEC v. Mark Leslie, Kenneth E. Lonchar, Paul A. Sallaberry, Michael M. Cully and Douglas S. Newton, Civil Action No. C 07-3444 (JF) (N.D. Cal.)

SEC Charges Five Former Officers of Veritas Software Corporation with Participating in Accounting Fraud Scheme

On July 2, 2007, the Securities and Exchange Commission filed civil fraud charges in the United States District Court for the Northern District of California against five former officers of Veritas Software Corporation. The SEC's complaint alleges that the defendants artificially inflated and/or intentionally manipulated and distorted Veritas' reported financial results and misled Veritas' independent auditors. The complaint alleges that, as a result of this misconduct, Veritas filed false and misleading financial statements from 2000 through 2002.

The individuals charged in the complaint are Mark Leslie, former chairman and chief executive officer, Kenneth E. Lonchar, former chief financial officer, Paul A. Sallaberry, former head of sales, Michael M. Cully, former controller, and Douglas S. Newton, former assistant controller. According to the complaint, Leslie, Lonchar and Sallaberry knowingly participated in a fraudulent scheme by artificially inflating Veritas' publicly reported revenues and earnings through an improper round-trip transaction with America Online, Inc. and by lying to Veritas' independent auditors. In addition, Lonchar, with the participation and assistance of Cully and Newton, intentionally manipulated and distorted Veritas' reported financial results from 2000 through 2002. Lonchar, Cully and Newton also misled Veritas' independent auditors.

Cully and Newton have agreed to settle the Commission's charges. Cully agreed to be permanently enjoined from violating Section 17(a) of the Securities Act of 1933 (the "Securities Act"), Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (the "Exchange Act") and Exchange Act Rules 10b-5, 13b2-1 and 13b2-2 and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11 and 13a-13, to be barred from serving as an officer or director of a public company for five years, to pay disgorgement and prejudgment interest of $181,470.67 and a civil penalty of $35,000. Newton agreed to be permanently enjoined from violating Section 13(b)(5) of the Exchange Act and Exchange Act Rules 13b2-1 and 13b2-2 and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11 and 13a-13, to pay disgorgement and prejudgment interest of $37,263.36 and a civil penalty of $25,000. The settlements by Cully and Newton are subject to court approval.

The Commission's complaint charges Leslie, Lonchar and Sallaberry with committing violations of Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act and Exchange Act Rules 10b-5, 13b2-1 and 13b2-2 and aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-13 and 13b2-1. Lonchar is also charged with aiding and abetting violations of Section 13(b)(2)(B) of the Exchange Act. The complaint seeks injunctive relief, disgorgement of ill-gotten gains plus prejudgment interest, civil monetary penalties and officer and director bars against each of them.

On February 20, 2007, the Commission filed a settled enforcement against Veritas. See http://sec.gov/litigation/litreleases/2007/lr20008.htm. If the court approves the Cully and Newton settlements, their disgorgement and penalties will be added to a Fair Fund for injured investors established in connection with that action.

SEC Complaint in this matter