The Securities and Exchange Commission may file a civil suit against Business Objects for the software company's practice of not disclosing its backlog of unshipped orders.
On Wednesday, Business Objects said that it received a "Wells notice" from the SEC, indicating that the SEC is recommending charges against the company.
In a statement, the company said it believes that the SEC complaint relates to the fact that the company does not report its backlog of unshipped orders in its financial earnings reports or on the company's balance sheet. The inquiry does not relate to how the company recognised revenue in the past, Business Objects said.
Business Objects, which merged with Crystal Decisions last year, is one of the largest providers of business intelligence software.
The company said it intends to respond in writing to the SEC and will defend itself against accusations of wrongdoing.
"The proposed action would not assert claims under the antifraud provisions of the securities laws. None of the company's officers or directors would be named as defendants in the matter," the company said in a statement.
News of the formal investigation into Business Objects sent its stock down on Wednesday morning. It opened at $19.25 (｣10.55), down from the previous day's close of $20.70.
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