But the SEC is now preparing to file charges against the groups former chairman, Paul Allaire (pictured) and Barry Romeril, its former chief financial officer, as well as its now dismissed auditor, KPMG.

An SEC complaint filed last Thursday (11 April) lists a number of alleged violations of proper accounting procedures.

It claimed Xerox had used "accounting tricks" to overstate its profits between 1997 and 2000 by a total of nearly 2.1bn. Xerox subsequently slumped into big losses after suffering a decline in its traditional photocopier business, while it tried to reposition itself as a digital press supplier.

In a statement on its settlement, Xerox said it "neither admits nor denies the allegations".

US financial analysts said the Enron scandal had prompted the SEC to clamp down on financial impropriety in corporate America.

This news was quickly followed by the 15 April revelation that Hewlett-Packard (HP) was being investigated by the SEC and New York State prosecutors.

HP is already facing a civil lawsuit from former director Walter Hewlett, who is accusing it of unlawfully pressurising institutional investors to back its controversial plans to merge with PC supplier Compaq.

The SECs interest in HP was triggered by Walter Hewletts allegation that the HP board had coerced Deutsche Bank into voting for the Compaq merger.

HP denied it had acted improperly.

Story by Paul Nesbitt