Peregrine Systems was a US software company which listed on the NASDAQ in 1997. In April 2002, the company announced a delay in the release of its FY02 financials due to continued audit activities. In May, the company announced that it was launching an internal investigation into potential accounting inaccuracies resulting in a share price collapse. In August 2002, the company initially claimed that revenue was overstated by US$25m between FY00 and 3Q02, debt was understated by US$180m and stock options by US$100m. However, a subsequent SEC investigation found that revenue had been overstated by US$509m, or 60%. The company was, in reality, deeply loss-making (as opposed to being mildly loss-making). Peregrine had parked significant amounts of software with resellers which were often not obligated to pay and had a right to return the software if not sold. Peregrine factored and then improperly derecognised receivables in order to hide non-payment. The company filed for chapter 11 in September 2002. Management was charged with fraud and imprisoned. 

Last updated March 2022

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