Marvell Technology Says An Audit Review Found No Fraudulent Activity, Shares Gain 2%

Shares of Marvell Technology Group Ltd. MRVL were trading higher by more than 2.50 percent on Tuesday after the company announced that its audit committee found no fraudulent activities.

Marvell Technology disclosed in its preliminary second-quarter results back in September that its Audit Committee is conducting an independent investigation of certain accounting and internal control matters.

Specifically, the investigation focused on "the approximately 7 to 8 percent of revenue recognized in the second quarter of fiscal 2016 that, based upon the original customer request date, would have been received and earned in the third quarter of fiscal 2016 and is now no longer available for receipt in that quarter."

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Marvell's Tuesday update confirmed that its Audit Committee, along with independent counsel and a forensic accounting specialist, found no fraudulent activity in the course of the investigation. Specifically, the committee concluded that revenue was recognized in accordance with the company's revenue recognition policy and generally accepted accounting principles.

The committee did, however, identify certain areas where internal controls were not fully followed and revenue from certain pull-in and distributor transactions was recognized prematurely. In addition, the committee also highlighted the "significant pressure" placed on sales and finance personnel to meet revenue targets.

Finally, the committee is evaluating if the errors are material to any previously reported financial period, but did add that it won't have any impact on the total amount of revenue ultimately recognized by the company.