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Xerox says SEC investigating accounting practices at ACS

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)