Despite Past Securities Fraud Scandal, Maryland Tech Company Plans to Go Public Again
SafeNet hopes to raise as much as $300 million amid local, national surge in IPOs
By Bob Keefe | July 14, 2010
A Maryland tech security company has filed for an initial public offering - just months after settling major lawsuits by the Securities and Exchange Commission and shareholders over allegations of securities fraud.
SafeNet Inc. of Belcamp, Md., northeast of Baltimore, hopes to raise as much as $300 million through the offering, which would make it one of region's biggest IPOs in recent years.
The company, which has more than 1,600 employees, provides data encryption and protection to customers ranging from the Department of Homeland Security to Starbucks, as well as numerous banks and financial companies around the world.
Even though it is unprofitable, it has grown dramatically in recent years, according to its SEC filing, with revenues rising from $287 million in 2006 to nearly $404 million last year.
Its future also appears bright, with the volume of digital transactions expanding rapidly and the government - and private industry - putting unprecedented importance on cybersecurity.
Yet it is SafeNet's past, not its future, which may give potential investors pause.
In November 2009, the company agreed to pay a $1 million fine to settle a SEC complaint that alleged its former top executives misstated financial results and improperly backdated stock options between 2000-2006. The company neither admitted nor denied the allegations in the SEC's complaint, although it resulted in the resignation of former CEO Anthony A. Caputo, former Chief Operating Officer Carole Argo and others. Argo was sentenced to six months in prison and ordered to pay a $1 million fine in the scandal.
The company also recently agreed to a tentative settlement in a shareholder lawsuit related to the backdating scandal, according to its SEC filing.
In the aftermath of the scandal, a San Francisco-based investment company, Vector Capital, took the company private. Vector plans to remain the SafeNet's biggest shareholder after the IPO, according to its SEC filing.
Citing SEC regulations, SafeNet spokeswoman Donna St. Germain said she could not comment about the company's past problems or its future prospects.
SafeNet's new IPO filing is the second in as many months by a Washington area tech company.
In June, McLean, Va.-based
Booz Allen Hamilton announced it also hopes to raise as much as $300 million by selling stock to the public.
The DC-area IPO filings are part of a recent surge in public stock offerings - especially among tech companies.
According to Greenwich, Conn. IPO research company Renaissance Capital, 137 IPO filings have been made so far this year - up 661 percent from a year ago.
The technology sector has been the biggest sector for IPOs, with 18 companies going public, according to Renaissance Capital.
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