SEC/McAfee, Inc.(f/k/a Network Associates, Inc.) Fair Fund
SEC v. McAfee, Inc., C-06-0009 (PJH)(N.D. Cal.)

Welcome to the SEC/McAfee, Inc. Fair Fund Website

If you purchased the common stock of McAfee, Inc. (formerly known as Network Associates, Inc.) during the period from August 17, 1998 through and including December 26, 2000, and held such stock through the close of the markets on December 26, 2000, you may be eligible for compensation.

Background

On January 4, 2006, the Securities and Exchange Commission (the "Commission") filed a Complaint in the United States District Court for the Northern District of California (the "Court") against McAfee, Inc. (f/k/a Network Associates, Inc.) ("McAfee") alleging that from the second quarter of 1998 through 2000, McAfee defrauded investors by engaging in a scheme to overstate its revenue and earnings by hundreds of millions of dollars. SEC v. McAfee, Inc., C-06-0009 (PJH) (N.D. Cal.). On February 9, 2006, the Court entered a Final Judgment against McAfee, to which McAfee consented without admitting or denying the allegations of the Complaint.

Pursuant to the Final Judgment, McAfee paid a total of $50,000,001 (disgorgement of $1 and a civil penalty of $50 million) to the Clerk of the Court. Those funds were thereafter deposited in an interest-bearing account with the Court Registry. On August 7, 2008, the Court authorized the Commission to establish a Fair Fund, pursuant to the provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002, composed of the funds deposited in the Court Registry account (the "Fair Fund"). On August 7, 2008, the Court also appointed Jeffrey Plotkin, Esq. of Day Pitney LLP as Distribution Agent to prepare and to implement, in consultation with the Commission, a plan for the distribution of the Fair Fund to investors harmed by the violations alleged in the Commission's Complaint. On March 3, 2009, the Court approved the Distribution Plan.

On May 15, 2009, the Court granted the SEC's motion to transfer an additional $15 million to the Fair Fund. Ingram Micro Inc. ("Ingram") agreed to pay that $15 million as disgorgement in connection with settled cease-and-desist proceedings brought by the SEC against Ingram relating to its alleged role in McAfee's alleged financial fraud during 1998 through 2000. Those additional monies increased the funds available for distribution to injured investors to approximately $65 million.

On January 13, 2010, the Court granted the SEC's motion to transfer an additional $1,347,563 million to the Fair Fund. This amount represented the total disgorgement, prejudgment interest, and civil penalty payments made by two former McAfee officers, Terry W. Davis and Eric G. Borrmann, in connection with their settlements of separate SEC civil actions relating to their alleged roles in McAfee's alleged financial fraud during 1998 through 2000. Those additional monies, plus accrued interest to the Fair Fund to date, have increased the funds available for distribution to injured investors to approximately $67 million.

To be potentially eligible to participate in the Fair Fund, claimants (except for certain participants in a class action settlement identified below) must submit a completed Proof of Claim Form. Investors whose claims were previously approved in the class action entitled In re Network Associates, Inc. II Securities Litigation, Case No. CV-00-4849-MJJ (N.D. Cal.), are automatically deemed eligible claimants with respect to stock transactions for which a claim was previously approved in that class action, and do not need to submit another Proof of Claim Form for those transactions only. See Special Notice to Network Associates II Claimants for further information. Please be sure to review the Distribution Plan Notice and the Distribution Plan to fully understand your rights. The deadline for receipt of Proof of Claim Forms by the Distribution Agent, which was originally August 10, 2009 and subsequently extended until September 10, 2009, has now expired.

During the week of September 21, 2009, deficiency notices were mailed to claimants who submitted deficient Proof of Claim Forms. (Claimants who submitted timely non-deficient claims will not receive deficiency notices.) Claimants who received a deficiency notice had an opportunity to cure their deficient claims by submitting the additional documentation or other information required to substantiate their claims within twenty days of the date of such notice. Pursuant to his discretion under the Distribution Plan, the Distribution Agent accepted responses to deficiency notices that were received by November 2, 2009. Claimants who did not respond by that date and cure the deficiency identified will have their claims rejected to the extent that they are deficient.

The Distribution Agent has completed his review of all claims. On December 8, 2009, Claim Determination Notices were mailed to all claimants setting forth the Distribution Agent’s conclusions regarding their claims. The Distribution Agent's claim determinations are final and not subject to appeal. The specific distributable amount of the Fair Fund, the specific pro rata amount per share payable to each approved claimant, and the scheduled date for the Fund distribution, have not yet been determined, but the Distribution Agent currently anticipates that payments should be mailed to approved claimants by early March 2010. In addition, all payments are subject to final Court approval.

On January 22, 2010, the Distribution Agent filed a motion with the Court seeking authority to distribute the Available Distribution from the Fair Fund in the amount of $67,230,000 to 16,183 Eligible Claimants on a pro rata basis calculated pursuant to Section 2.6 of the Distribution Plan, which would result in a distribution payment to Eligible Claimants of $1.00 per share for their Approved Claims. On January 29, 2010, the Court Granted the motion. The Distribution Agent expects to distribute payments to Eligible Claimants in mid-February 2010.

If you have additional questions, please call 1(800) 893-4359 in the United States or send an email to Questions@McAfeeSECsettlement.com.

You can also visit the Securities and Exchange Commission's website by clicking here.