PurchasePro targeted in SEC probe

Tuesday, Aug. 6, 2002 | 10:55 a.m.

SUN STAFF AND WIRE REPORTS

Las Vegas technology company PurchasePro clarified today that it is under investigation by the Securities and Exchange Commission and said it is cooperating fully with the probe.

In a statement, the software company said it has also provided information to the SEC regarding inquiries into other companies.

The Wall Street Journal and the Washington Post last week first reported that federal regulators were investigating the relationship between AOL Time Warner Inc.'s America Online division and PurchasePro.

PurchasePro confirmed last week there was an investigation, but it was unclear whether PurchasePro was the target. In today's statement, PurchasePro "confirmed the existence of an investigation by the U.S. Securities and Exchange Commission directed towards PurchasePro." PurchasePro stock was unchanged this morning at 29 cents.

An SEC inquiry of AOL was disclosed July 24 on the heels of Washington Post articles that questioned AOL's unconventional accounting techniques. AOL Time Warner has consistently said its accounting is appropriate.

Also last week, America Online said that the Department of Justice joined the SEC probe. The investigators are looking into whether the online division improperly booked revenue from partners such as PurchasePro.

America Online booked advertising revenue by cashing in PurchasePro stock warrants. Normally, equity sales are booked as one-time investment gains, rather than revenue.