Ingram Micro (IM) and security vendor McAfee have done the dance and are now paying the fiddler. The two companies reportedly engaged in a channel stuffing scheme over the course of two years that in turn boosted revenues for McAfee and profit margins for Ingram Micro. Ingram Micro now has paid a $15 million fine to the U.S. Securities and Exchange Commission; McAfee was fined $50 million back in 2006. The money will go to McAfee shareholders.
Allegedly, McAfee switched to a “sell-in” accounting method, accounting for products sold into distribution rather than waiting for those goods to reach the end user. McAfee provided Ingram Micro with favorable terms, thereby initiating a circular arrangement where Ingram Micro accepted more goods than it expected to sell, inflating McAfee’s revenue.