Frequently Asked Questions
- What was this case about?
- Who was eligible to participate in the Fair Fund?
- What is the amount of the Fair Fund?
- May I still participate in the Fair Fund?
- Did I need to submit a Proof of Claim Form if I my claim was approved in the Network Associates II Class Action?
- What was the deadline for submitting my Proof of Claim Form?
- How were claimants notified if their Proof of Claim Form was deficient?
- How were claimants notified if their claim was approved or rejected?
- How much money will I receive if my claim was approved?
- How was my loss calculated and how will the Fair Fund be distributed?
- Was there a minimum dollar amount that a claim must equal or exceed before an approved claim will be paid?
- When will I receive my payment?
- Who is the Distribution Agent?
- Where can I obtain a Distribution Plan Notice and Proof of Claim Form?
- How do I get more information?
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.) (“SEC v. McAfee”). 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.
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.
Who was eligible to participate in the Fair Fund?
Eligible claimants were those who (i) purchased McAfee (f/k/a Network Associates) common stock during the period from trade date August 17, 1998 through and including trade date December 26, 2000 (the “Recovery Period”), and (ii) continuously held or retained such stock through the close of the markets on December 26, 2000. One would not have been entitled to any recovery from the Fair Fund for any McAfee common stock purchased prior to August 17, 1998, or purchased during the Recovery Period but sold prior to December 26, 2000.
What is the amount of the Fair Fund?
The total distributable amount of the Fair Fund is $67,230,000.
May I still participate in the Fair Fund?
No new claims submitted after the filing deadline of September 10, 2009 will be considered.
No. 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.), were automatically deemed eligible claimants with respect to stock transactions for which a claim was previously approved in that class action, and did not need to submit another Proof of Claim Form for those transactions only. See Special Notice to Network Associates II Claimants for further information.
What was the deadline for submitting my Proof of Claim Form?
The deadline, which was August 10, 2009, and subsequently extended until September 10, 2009, has now expired. Proof of Claim Forms (and the supporting documentation) must have been received by the Distribution Agent no later than September 10, 2009 at the address below:
SEC/McAfee, Inc. (f/k/a Network Associates, Inc.) Fair Fund
c/o Jeffrey Plotkin, Esq.
Distribution Agent
P.O. Box 9306
Dublin, OH 43017-4206
How were claimants notified if their Proof of Claim Form was deficient?
Notices regarding deficiencies were sent to claimants during the week of September 21, 2009. If claimants believed that they could cure the deficiency, they were required to submit to the Distribution Agent within twenty days of the date of the notice the additional documentation or other information required to substantiate their claims. 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 had their claims rejected to the extent that they were deficient.
How were claimants notified if their claim was approved or rejected?
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.
How much money will I receive if my claim was approved?
Eligible Claimants will receive a distribution payment of $1.00 per share for their Approved Claims (e.g., an Approved Claim for 1,000 shares would result in a distribution payment of $1,000).
How was my loss calculated and how will the Fair Fund be distributed?
The Distribution Plan Notice provides a formula that estimates the recognized loss per share at $7.25 (seven dollars and twenty-five cents.) This amount was calculated as outlined in the Declaration of Jeffrey Plotkin, dated February 3, 2009, filed with the Court. See Declaration of Jeffrey Plotkin. Your eligible loss equals the number of documented shares of McAfee common stock you purchased during the period from August 17, 1998 through December 26, 2000, and held through December 26, 2000 multiplied by $7.25. However, because the amount of the Fair Fund available for distribution is not sufficient to pay all eligible losses, you will not receive a distribution of that amount if your claim was approved for payment. Instead, the Distribution Agent will make distributions to eligible claimants on a pro rata basis of $1.00 per share for their Approved Claims.
The Distribution Plan originally provided that payments would only be made to those claimants entitled to receive a minimum dollar amount to be determined after all claims had been processed. On November 25, 2009, the Court granted the Distribution Agent's motion to amend the Distribution Plan to remove that requirement. Thus, all eligible and approved claims will be paid regardless of their dollar value.
When will I receive my payment?
Assuming your claim was approved by the Distribution Agent and the Court, it is currently anticipated that any payment to which you may be entitled will be mailed by early to mid-February 2010.
Who is the Distribution Agent?
The Court has appointed Jeffrey Plotkin, Esq. of the law firm Day Pitney, LLP to serve as the Distribution Agent.
Where can I obtain a Distribution Plan Notice and Proof of Claim Form?
You can obtain a Distribution Plan Notice and Proof of Claim Form by either downloading all documents from this website by clicking here or we can mail you these documents if you provide your name and address by clicking here.
How do I get more information?
You may obtain additional information about the litigation and the Fair Fund by accessing the Fund website at: www.McAfeeSECsettlement.com. If you have questions which are not answered by the website, please contact us at the Fair Fund’s toll-free hotline at 1 (800) 893-4359 or by email at Questions@McAfeeSECsettlement.com.