The joint probe is also investigating whether CA improperly boosted its financial results to help produce 1 bln usd in stock awards for the company's top three executives in 1998, according to the people.

CA confirmed in February that the company is being investigated by federal authorities and the SEC.

Under an accounting method CA has since abandoned, it booked large amounts of these contracts' total value up front -- and then often replaced them with new contracts, offering different prices and products, before the original contract term ran out.

Investigators are looking at whether the revenue that would have been received in the later years of the original contracts was booked without ever landing in the company's coffers.

CA declined to comment but has said in the past that its accounting for the contracts was proper.

Federal investigators are also looking at the terms of a huge incentive grant offered to three top CA officers. For them to collect, the stock had to close above 53.33 usd for 60 days within any 12 months between 1995 and 2000.

In May 1998, following a string of good earnings reports and other news, that goal was reached.

A grant of 20.25 mln shares, then valued at over 1 bln usd, went to the officers: Chairman Charles Wang, who was also chief executive at the time; current CEO Sanjay Kumar, then president; and Executive Vice President Russell Artzt, who headed research.

Within two months, CA warned of slowing demand and its shares began to fall. The accounting method favoring upfront recognition of revenue was abandoned in Oct 2000 in favor of a more conservative method. Since then, CA has reported losses for six straight quarters.

The stock grant to the officers was later pared by 4.5 mln shares in settlements of shareholder suits. CA did not make the three executives available for comment, the Journal said.

jfr/jkm/ NNN