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Xerox says SEC investigating accounting practices at ACS

The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonatha
The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonatha

(Reuters) - Xerox Corp said the U.S. Securities and Exchange Commission is investigating certain accounting practices at Affiliated Computer Services, which it bought in 2010 for $5.5 billion.

The investigation is focused on whether revenue from some ACS equipment resale deals should have been presented on a net rather than gross basis, primarily before the acquisition, Xerox said in a regulatory filing.

Xerox moved into business services with its purchase of ACS, the company's biggest deal in its 106-year history. The company now gets more than half of its revenue from services.

Xerox said the president of its services division had received a "Wells notice" from SEC staff.

A Wells notice is the document the SEC sends to a firm or individual when it plans to recommend bringing charges. Recipients of Wells notices are given a chance to explain why the SEC should not file a lawsuit.

Xerox said two other individuals, a current employee and a former employee, have also received Wells notices.

The SEC staff has advised it will not recommend charges against Xerox, the company said.

(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Don Sebastian)

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