Thomas C. Newkirk
Arthur S. Lowry
James T. Coffman
Thomas D. Silverstein
Gregory T. Lawrence
Attorneys for Plaintiff
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
(202) 942-4868 (Lowry)
(202) 942-9581 (Fax)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

Plaintiff, Securities and Exchange Commission ("Commission"), for its Complaint, alleges as follows:

INTRODUCTION

1. Defendant, Phillip E. White ("WHITE"), the former President, Chief Executive Officer and Chairman of the Board of Directors of Informix Corporation ("Informix"), a public company that engaged in the licensing of software, violated anti-fraud and other provisions of the federal securities laws. In particular, WHITE concealed side agreements that rendered revenue recognition improper on certain transactions that Informix had reported on its financial statements for its fiscal year ended on December 31, 1996. To further his scheme, WHITE made false statements and representations concerning these side agreements to members of Informix's financial staff and to Informix's independent auditor. WHITE did this to avoid triggering a restatement of Informix's 1996 financial statements. Informix's year end 1996 financial statements were included in Informix's 1996 Annual Report, Securities and Exchange Commission Form 10-K ("Form 10-K"), which Informix filed with the Commission on March 31, 1997, and the same financial statements were incorporated by reference in Informix's Registration Statements, Securities and Exchange Commission Form S-8 ("Form S-8"), which Informix filed on July 16, 1997. WHITE signed the Form 10-K and Forms S-8.
    

 
2. In or around the end of July 1997, Informix's financial staff and independent auditor discovered the side agreements. Immediately after learning of the side agreements, Informix's Board of Directors forced WHITE to resign from the Company.
    

 
3. Informix ultimately restated its 1996 financial statements to reflect substantial decreases in its earnings and income subsequent to the discovery of the side agreements. On November 18, 1997, Informix filed an amended 1996 Form 10-K, which restated the results of its operations for that year. The amended filing revealed that, instead of earning net income of $97.8 million as Informix originally reported, Informix suffered a net loss of $73.6 million in 1996.
    

 
4. By engaging in this conduct, WHITE violated, and aided or abetted violations of, the anti-fraud, reporting, and record-keeping provisions of the federal securities laws and, unless restrained and enjoined by this Court, will continue to do so. The Commission requests, among other things, that this Court enter an Order permanently enjoining WHITE from committing further violations of the federal securities laws as alleged herein, permanently barring WHITE from acting as an officer or director of any public company, and requiring WHITE to pay monetary penalties based on his violations of the federal securities laws.

JURISDICTION AND VENUE

5. The Commission brings this action pursuant to Sections 20(b) and 20(d) [15 U.S.C. §§ 77t(b), 77j(d)] of the Securities Act of 1933 ("Securities Act"), and pursuant to Sections 21(d) and 21(e) [15 U.S.C. §§ 78u(d) and 78u(3)] of the Securities Exchange Act of 1934 ("Exchange Act").
6. This Court has jurisdiction over this action pursuant to Sections 22(a) of the Securities Act [15 U.S.C. §§ 77v(a)] and Sections 21(e) and 27 of the Exchange Act [15 U.S.C. §§ 78u(e) and 78aa].
    
7. Venue is proper in this District pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].
    
8. Defendant, directly or indirectly, has made use of the means and instrumentalities of interstate commerce, of the mails, and of the facilities of a national securities exchange, and of the means and instruments of transportation or communication in interstate commerce, in connection with the transactions, acts, practices, and courses of conduct alleged herein.

INTRA-DISTRICT ASSIGNMENT

9. Assignment to the San Francisco Division is appropriate pursuant to Civil Local Rule 3-2(d) because a substantial part of the events or omissions which give rise to the claims in this case occurred in the County of San Mateo, California.

WHITE CONCEALS MATERIAL INFORMATION

A. The Defendant

10. WHITE, age 60, is a resident of Atherton, California. Prior to discovery of the material information WHITE concealed, as described herein, WHITE served as the President, CEO, and Chairman of the Board of Directors of Informix. WHITE was forced to resign from Informix on July 30, 1997, after the Board of Directors learned of the side agreements WHITE had been concealing.

B. Public Company Involved

11. At all relevant times, Informix was a multinational database software and information asset management company with its principal executive offices in Menlo Park, California. Informix's common stock was registered pursuant to section 12(g) of the Securities Exchange Act of 1934 [15 U.S.C. § 78l(g)] and traded on Nasdaq National Market System under the symbol "IFMX." Informix's business included licensing software to resellers and end users. On July 2, 2001, after selling its database software subsidiary, Informix was renamed Ascential Software Corporation; Ascential's common stock trades on the Nasdaq National Market System under the symbol "ASCL."

C. Informix's Software Contracts and Accounting Practices

12. At all relevant times, Informix entered into licensing contracts with certain customers, for example, computer hardware manufacturers, which allowed the customer to resell Informix's software to end users. Informix referred to one such type contract as a "pool of funds" contract. In a pool of funds contract, an Informix customer that intended to resell Informix software agreed to make payments to Informix over time for the right to resell its software to end users.
     
13. In 1996, Informix entered into a number of pool of funds contracts. In particular, Informix entered into two pool of funds agreements in 1996, one with a European subsidiary of a United States company, and one with a Japanese company. Both contracts contemplated that the companies would have the right to resell Informix's software for a period of time which continued into 1997, and the right to make payments under the contracts to Informix into 1997 as well. The pool of funds contract with the European subsidiary required that company to pay Informix approximately $6.4 million, $3.2 million payable by December 31, 1996, and $3.2 million payable by March 31, 1997. The contract with the Japanese company obligated that company to pay Informix approximately $4.7 million, payable as the software was resold, but the total balance due to Informix by November 20, 1997.
     
14. Informix followed an accounting practice of recognizing revenue from a pool of funds contracts at the time it entered into such a contract if payment was due within twelve months from the contract's signing. This accounting practice affected Informix's financial statements, by allowing it to include in its revenue payments it anticipated it would receive from a pool of funds contract at the time the contract was signed, even if the payments were not actually made by the customer until a later financial reporting period. At the time, generally accepted accounting practices ("GAAP") provided that such anticipated payments could be recognized as revenue before they were received if the contract met certain strict requirements. These requirements were set forth in a standard known as the American Institute of Certified Public Accountants' Statement of Position 91-1, "Software Revenue Recognition" ("SOP 91-1"). Following the standards set forth in SOP 91-1, Informix could recognize future revenue from a pool of funds contract at the time the contract was signed if the following requirements, among others, were met: (a) Informix had delivered the software to the customer; (b) Informix had no continuing obligations under the contract; and (c) the customer's payment called for under the contract was fixed and collectibility of that payment was probable. Under SOP 91-1, a fee was presumed not to be fixed if payment was not due until more than twelve months after delivery.

D. Problems Arise Soon After Informix's 1996 Financial Statements Are Filed

15. Informix's 1996 fiscal year ended on December 31, 1996. On March 31, 1997, Informix filed its 1996 annual report on Form 10-K with the Commission. The Form 10-K contained Informix's financial statements for fiscal year 1996 and the company's independent auditor's unqualified audit report stating that Informix's financial statements were fairly presented in accordance with the applicable accounting principles. Informix's 1996 reported revenues included the $6.4 million the pool of funds contract with the European subsidiary and $4.7 million from the pool of funds contract with the Japanese company. WHITE signed Informix's 1996 Form 10-K in his capacity as Informix's President, CEO and Chairman of the Board of Directors.
     
16. At the time WHITE signed Informix's 1996 Form 10-K, he was aware that Informix's independent auditor did not agree with all of Informix's decisions concerning the revenue Informix had reported on its financial statements. Informix's independent auditor had informed WHITE and others of these disagreements and differences of opinion, which were reflected in a document known as the "Summary of Audit Differences" report ("SAD"). At the time WHITE signed the Form 10-K, Informix's independent auditor did not consider the items on the SAD to be such that it would be unwilling to issue an unqualified audit report.
     
17. At the time WHITE signed Informix's 1996 Form 10-K, he had been told by the company's independent auditor that if Informix gave any concessions to a customer under a pool of funds contract, Informix would be unable to recognize the revenue from that contract until it was actually received. In fact, before Informix's independent auditor issued its unqualified audit report for Informix's 1996 financial statements, the auditor demanded that Informix's management provide it with an explicit representation, among others, that none of the revenue Informix had recognized was subject to forfeiture, refund, or other concession. Informix provided such a representation to its auditor in a letter letter signed by WHITE, signing as Informix's Chief Executive Officer.
     
18. In addition, at the time WHITE signed Informix's Form 10-K, he was told by Informix's independent auditor that modification of pool of funds contracts by so-called "side agreements," that is, separate agreements modifying the pool of funds contracts contained in a letter or other document provided to a reseller customer, would prevent Informix from being able to recognize the revenue from that contract until Informix actually received those payments.
     
19. In or around April 1997, shortly after WHITE signed Informix's Form 10-K, Informix and its independent auditor learned of a possible problem involving side agreements with several Informix contracts in the United Kingdom that Informix had recognized revenue on in its 1996 financial statements. Informix's independent auditor told WHITE and others that if a review of those contracts showed that the revenue should not have been recognized in 1996, it could result in an increase in the SAD to the level where the auditor would insist that Informix restate its 1996 financial statements. At the completion of the review, the auditor concluded that the increases in the SAD caused by the side agreements did not require a restatement. However, the auditor told WHITE and others that the discovery of additional side agreements related to 1996 contracts would likely increase the SAD to the point where the auditors would insist that Informix restate its financial results.

E. WHITE Enters Into A Secret Side Agreement With the Japanese Company

20. In or around late June 1997, after the investigation concerning the side agreements to Informix's United Kingdom contracts, WHITE and Informix's financial staff learned of a side agreement to the $4.7 million pool of funds contract with the Japanese company. The side agreement allowed the Japanese company to take up to two years to pay the fee it owed Informix. Consequently, under the GAAP standards discussed above, Informix improperly recognized revenue from the $4.7 million pool of funds contract with the Japanese company in its 1996 financial statements.
     
21. WHITE was aware that the inclusion of revenue from the pool of funds contract with the Japanese company on the SAD would trigger a restatement. In an attempt to prevent a restatement, WHITE decided to ask the Japanese company to rescind the side agreement. WHITE knew that Informix could not pay for, or otherwise give any concession, in order to obtain rescission of the side agreement with the Japanese Company.
     
22. On or about July 2, 1997, WHITE flew from San Francisco to Japan to meet with representatives of the Japanese company to seek a rescission of the side agreement. On or about July 4, 1997, in Tokyo, Japan, WHITE and others met with representatives of the Japanese company. In response to WHITE's request, the representatives of the Japanese company agreed to rescind the existing side agreement, in exchange for Informix's commitment to purchase goods and services from the Japanese company in an amount equal to the remaining amount due to Informix under the pool of funds contract, which was approximately $3 million.
     
23. WHITE agreed to the Japanese company's request, even though he had been told that Informix could not give any concession to the Japanese company in order to obtain the existing side agreement's rescission. Accordingly, WHITE negotiated a new side agreement with the Japanese company, which was memorialized in a document entitled "Memorandum of Understanding." In exchange for the new side agreement memorialized in the Memorandum of Understanding, the Japanese company provided Informix with a letter dated July 4, 1997, rescinding the original side agreement.
     
24. WHITE returned to the United States after entering into the new side agreement to obtain the Japanese company's rescission of the original side agreement. While WHITE informed Informix's financial staff and independent auditor that he had obtained rescission of the original side agreement with the Japanese company, he did not tell Informix's financial staff or Informix's independent auditor that, in order to obtain the rescission, he had entered into a new side agreement that obligated Informix to pay $3 million over the next year for goods and services from the Japanese company.
     
25. WHITE provided the rescission letter from the Japanese company to Informix's financial staff and independent auditor. However, WHITE concealed the new side agreement to the $4.7 million pool of funds contract with the Japanese company from Informix's financial staff and independent auditor, at the same time he was concealing the existing side agreement to the $6.4 million pool of funds contract with the European subsidiary. In fact, when WHITE was asked by a member of Informix's financial staff what it had cost to obtain the rescission of the original side agreement from the Japanese company, WHITE falsely stated that the only thing it had cost was "a lot of aggravation."

F. WHITE Conceals A Side Agreement With the European Subsidiary

26. No later than July 2, 1997, after learning about the side agreement with the Japanese company, WHITE became aware of a side agreement to the $6.4 million pool of funds contract with the European subsidiary. The side agreement gave the European subsidiary the right to cancel and seek a refund of payments made to Informix pursuant to the contract. The side agreement consequently made Informix's recognition of revenue on this pool of funds contract in its 1996 financial statement improper, and not in accordance with applicable accounting principles. WHITE concealed this side agreement from Informix's financial staff and from Informix's independent auditor. WHITE knew that if this side agreement were made known to Informix's independent auditor, it would result in an increase in the SAD, and Informix's auditor would likely withdraw its unqualified audit report, which then would lead Informix to restate its financial statements to reflect decreased revenue and income.
     
27. No later than July 2, 1997, WHITE learned that the European subsidiary had decided to exercise its rights under the side agreement to cancel the $6.4 million pool of funds contract and seek a refund of amounts paid to Informix. WHITE knew that, if the European subsidiary exercised its rights and demanded a refund, the side agreement would no longer be able to be concealed from Informix's financial staff or independent auditor. WHITE also knew that once the side agreement was discovered, it would likely trigger a restatement of Informix's fiscal 1996 financial statements. Accordingly, for approximately a month, WHITE took steps to continue to keep the side agreement concealed from Informix's independent auditor. Among other things, WHITE met with individuals representing the European subsidiary, and urged the company not to exercise its rights under the side agreement. During this time, WHITE did not disclose the existence of the side agreement, or the information that European subsidiary intended to rely on the cancellation rights granted in that side agreement, to Informix's financial staff or to its independent auditor.

G. WHITE Signs Two False Registration Statements for Sales of Informix's Stock

28. On or about July 16, 1997, Informix filed with the Commission two Form S-8 registration statements for the sale of 12 million shares of common stock to Informix employees. Informix delayed making these filings until after WHITE announced he had obtained a rescission of the side agreement with the Japanese company, to avoid having to restate its 1996 financial statements. WHITE signed the registration statements in his capacities as an Informix director and an officer. The registration statements incorporated by reference Informix's previously-filed 1996 Form 10-K, including the financial statements therein, and the independent auditor's unqualified audit report on these financial statements.
     
29. Informix's independent auditor required certain specific representations from Informix before it allowed Informix to incorporate by reference its prior unqualified audit report in Informix's S-8 common stock registration statements. Specifically, Informix's independent auditor required, and received, a letter dated July 11, 1997 signed by WHITE, as Informix's Chief Executive Officer, in which WHITE represented, among other things, that no events or transactions had occurred that would have a material effect on the company's audited financial statements, or that were sufficiently significant to require mention in a note to the company's audited financial statements in order to make the financial statements not misleading regarding Informix's financial position, results of operation, or cash flows. When he signed the letter, WHITE knew that these representations to Informix's auditor were false, as a result of, among other things, the side agreement with the European subsidiary, and the new side agreement he had just negotiated with the Japanese company.

H. Informix And Its Auditor Discover the Side Agreements; White Is Forced to Resign from Informix; Informix Restates its Financials

30. In or around the last week of July 1997, Informix's financial staff discovered the Memorandum of Understanding which memorialized the new side agreement WHITE had negotiated with the Japanese company, and brought the new side agreement to the attention of Informix's independent auditor. At about the same time, Informix's independent auditor also learned about the side agreement to the European subsidiary's pool of funds contract. A meeting of Informix's Board of Directors was called for July 30, 1997. After the side agreements were made known to the Board of Directors at that meeting, the Board of Directors forced WHITE to resign.
     
31. After discovering the side agreements that WHITE had concealed, Informix's independent auditor determined that Informix's financial statements required a thorough review. On or about August 7, 1997, Informix publicly announced it would be restating certain of its financial statements. Subsequently, on or about November 18, 1997, Informix filed with the Commission restated financial statements for fiscal years and quarters from 1994 through 1996, and for the first quarter of fiscal 1997. For fiscal year 1996, Informix's financial statements, which previously reflected net income of $97.8 million, were restated to reveal a net loss of $73.6 million for that year, a difference of approximately 233%.

CLAIMS FOR RELIEF

FIRST CLAIM

WHITE violated Exchange Act Section 10(b) and Exchange Act Rule 10b-5
[Fraud in Connection with the Purchase or Sale of Securities]

32. Paragraphs 1 through 31 above are incorporated herein by this reference.
     
33. Defendant WHITE, directly or indirectly, by the use of the means or instrumentalities of interstate commerce, or of the mails, or of the facilities of a national securities exchange, knowingly or recklessly: (a) employed devices, schemes, and artifices to defraud, (b) made untrue statements of material fact or omitted to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, and (c) engaged in acts, transactions, practices, and courses of business which operated or would operate as a fraud or deceit upon the purchasers of securities and upon other persons, in connection with the purchase or sale of a security.
     
34. In connection with the above described acts and omissions, defendant WHITE acted knowingly or recklessly. He knew, or was reckless in not knowing, that Informix's 1996 Form 10-K, which included the company's financial statements and the independent auditor's unqualified audit report thereon, as filed with the Commission, contained material misstatements and omissions of material fact. Nevertheless, WHITE failed to correct those material misstatements and omissions, and signed additional statements by Informix which were filed with the Commission incorporating those material misstatements and omissions.
35. By reason of the foregoing, WHITE violated Section 10(b) and of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].

SECOND CLAIM

WHITE Violated Securities Act Section 17(a)
[Fraud in Connection with the Offer or Sale of Securities]

36. Paragraphs 1 through 35 above are incorporated herein by this reference.
     
37. The S-8 registration statements for the sale of 12 million shares of Informix common stock, filed with the Commission on July 16, 1997, incorporated by reference Informix's 1996 Form 10-K, including the company's financial statements and the independent auditor's unqualified audit report thereon.
     
38. As a consequence of the foregoing, defendant WHITE, in the offer or sale of securities, by use of the means or instruments of transportation or communication in interstate commerce, or by use of the mails, directly or indirectly: (a) employed devices, schemes or artifices to defraud; (b) obtained money or property by means of untrue statements of material facts or omissions to state material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; and (c) engaged in transactions, practices, or courses of business which operated or would operate as a fraud or a deceit upon purchasers of securities.
     
39. In connection with the above described acts and omissions, defendant WHITE acted knowingly, recklessly, or negligently. WHITE knew, or was reckless in not knowing, or should have known, that the above-mentioned registration statements filed with the Commission contained material misstatements and omissions. By reason of the foregoing, WHITE violated Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].

THIRD CLAIM

WHITE Violated Exchange Act Section 13(b)(5)
and Exchange Act Rules 13b2-1
[Falsifying Books and Records]

40. Paragraphs 1 through 40 above are incorporated herein by this reference.
     
41. Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. § 78m(b)(2)(a)] requires public companies to make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the company's transactions and dispositions of its assets.
     
42. Section 13(b)(5) of the Exchange Act [15 U.S.C. § 78m(b)(5)] prohibits, among other things, any person from knowingly falsifying any book, record, or account, as described in 13(b)(2) of the Exchange Act. Exchange Act Rule 13b2-1 [17 C.F.R. § 240.13b2-1] prohibits any person from, directly or indirectly, falsifying, or causing to be falsified, any corporate book, record or account.

44. By reason of the conduct described above, including, but not limited to WHITE's negotiation of the new side agreement with the Japanese company, and his concealment of the side agreements to the pool of funds contracts described above, WHITE violated Section 13(b)(5) of the Exchange Act and Exchange Act Rule 13b2-1.

FOURTH CLAIM

WHITE Aided and Abetted Violations of Exchange Act
Sections 13(a) and 13(b)(2)(A) and Exchange Act
Rules 12b-20 and 13a-1
[Aiding and Abetting Reporting and Books and Records Violations]

45. Paragraphs 1 through 44 above are incorporated herein by this reference.
     
46. Section 13(a) of the Exchange Act and Rule 13a-1 thereunder require issuers of registered securities to file with the Commission factually accurate annual reports. Exchange Act Rule 12b-20 provides that in addition to the information expressly required to be included in a statement or report to the Commission, there shall be added such further material information, if any, as may be necessary to make the required statements, in the light of the circumstances under which they are made, not misleading.
     
47. Due to the side agreements with the European subsidiary and the Japanese company described above, Informix's annual report for 1996 was not accurate, and contained material misstatements and omissions of fact. As a result of WHITE's conduct as alleged herein, Informix failed to supply the further material information necessary to correct those material misstatements and omissions of fact.
     
48. As a further result of WHITE's conduct as alleged herein, Informix's books and records failed to accurately and fairly reflect the company's transactions and dispositions of its assets in reasonable detail, in violation of Exchange Act Section 13(b)(2)(A).
     
49. WHITE knowingly and substantially assisted in Informix's failure to supply the further material information necessary to correct Informix's annual report, and to make and keep the books, records, and accounts required under the federal securities laws, by, among other things, entering into the new side agreement with the Japanese company and concealing the side agreements to the pool of funds contracts, as alleged above.
     
50. By reason of the foregoing, WHITE aided and abetted violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Exchange Act Rules 13a-1 and 12b-20.

FIFTH CLAIM

WHITE Violated Exchange Act Rule 13b2-2
[Making False Statements to Accountants]

51. Paragraphs 1 through 50 above are incorporated herein by this reference.
     
52. Exchange Act Rule 13b2-2 [17 C.F.R. § 240.13b2-2], prohibits officers and directors of a public company from making materially false statements or omissions of material fact to an accountant in connection with an audit of the company's financial statements, or in connection with the preparation of any document to be filed with the Commission.
     
53. In connection with the filing of the S-8 registration statements for the sale of 12 million shares of Informix common stock, WHITE - an officer and director of Informix - signed a letter dated July 11, 1997 addressed to Informix's independent auditor, which letter contained materially false and misleading statements and omissions of fact concerning Informix's financial statements, as alleged above.
     
54. Moreover, WHITE - an officer and director of Informix - failed to inform Informix's independent auditors of the new side agreement to the $4.7 million pool of funds agreement with the Japanese company that he had negotiated, and failed to inform the independent auditors of the side agreement to the $6.4 million pool of funds contract with the European subsidiary.
     
55. By reason of the foregoing, WHITE violated Exchange Act Rule 13b2-2.

PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that this Court:

Enter a Final Judgment:

A. Permanently restraining and enjoining WHITE from violating Section 10(b) of the Exchange Act and Rule 10b-5 thereunder;

B. Permanently restraining and enjoining WHITE from violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)];

C. Permanently restraining and enjoining White from violating Section13(b)(5) of the Exchange Act and Exchange Act Rule 13b2-1;

D. Permanently restraining and enjoining WHITE from aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Exchange Act Rules 12b-20 and 13a-1;

E. Permanently restraining and enjoining WHITE from violating Exchange Act Rule 13b2-2;

F. Prohibiting WHITE, pursuant to Section 20(e) of the Securities Act and Section 21(d)(2) of the Exchange Act, from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act, or that is required to file reports pursuant to Section 15(d) of the Exchange Act;

G. Ordering WHITE to pay civil money penalties pursuant to Section 20(d) of the Securities Act and Section 21(d)(3) of the Exchange Act; and

H. Granting such other relief as this Court may deem just and proper.

DEMAND FOR JURY TRIAL

Plaintiff United States Securities and Exchange Commission demands a jury trial pursuant to Rule 38(b) of the Federal Rules of Civil Procedure for all issues so triable.