VMware struck a deal with market regulator SEC to end a dispute over its financial figures. The SEC accused VMware of ‘creatively’ accounting for sold licenses.
The deal involves VMware paying a fine of €7.9 million ($8 million) to the US market regulator. In return, the SEC waives further action against the virtualization giant for potentially misleading investors by unclearly reporting on its financial performance.
Creative accounting
The SEC accused VMware of misleading investors in its order books for fiscal 2019 and 2020. According to the regulator, VMware intentionally delayed the delivery of license keys for sales deals until a quarter had passed.
In doing so, the revenue from these licenses could be booked for the next quarter. The alleged workaround was reportedly applied to millions worth of sales.
According to the SEC, VMware successfully adjusted its financial results and outlook. The regulator noted that investors were not informed of VMware’s accounting influence on the revenue results. VMware allegedly violated several market laws in the United States.
VMware responds
VMware paid the €7.9 million fine without a literal admission of guilt. In a statement, the virtualization giant claims that the SEC did not find any deviations from valid accounting practices. According to VMware, paying up is the right course of action. The company says it continues to maintain high standards of integrity.
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