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FalconStor accounting practices probed

ReiJane Huai, then chief executive of FalconStor Software,

ReiJane Huai, then chief executive of FalconStor Software, in his Melville office. (September 2009) Credit: File / Howard Schnapp

Melville-based FalconStor Software Inc. for the first time disclosed Thursday that its accounting practices are under investigation.

The disclosure came in a routine filing with the Securities and Exchange Commission, as the company asked for an extra five days to prepare its quarterly financial report.

The company said the delay is due to an internal investigation into its former chief executive's alleged improper conduct.

The company is being run by an interim leadership team after the abrupt resignation in September of ReiJane Huai, the chief executive, after allegations that he made improper payments to a customer.

The company told the SEC on Wednesday that it "was unable to file its Form 10-Q for the fiscal quarter ended September 30, 2010 (the "report") on November 9 due to an internal investigation being conducted by a special committee of the company's board of directors of certain of the Company's past accounting practices and certain improper payments."

The delayed quarterly report was for the three-month period ending Sept. 30 -- the day after Huai resigned. No further details on the nature of the accounting investigation were contained in FalconStor’s public SEC filings. 

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