Updated from 8:43 a.m. ESTComputer Associates ( CA) confirmed Friday that the Securities and Exchange Commission and U.S. attorney's office are conducting a preliminary inquiry into the company, after speculation earlier this week that the firm was being investigated for deliberately overstating earnings. The world's fourth-largest software maker said on a conference call that its lawyers have "reached out" to both organizations, which confirmed there is an inquiry but CEO Sanjay Kumar said he was unsure of the nature of the probes. Shares of Computer Associates plunged 13% to $16.37. Earlier this week, the stock was slammed after Long Island's Newsday reported that the U.S. attorney for the Eastern District of New York and the Federal Bureau of Investigation are investigating the company to see whether it violated federal criminal fraud laws through its accounting practices. In addition, The New York Times, citing people close to the investigation, suggested that the company artificially inflated profits to boost its stock price and enrich senior executives, leading to the scrutiny of federal prosecutors in Brooklyn. Computer Associates has asked to meet with both the SEC and U.S. attorney's office and said it would cooperate fully. As yet, it has not received a formal letter of inquiry, or indeed, any notification from the SEC. The conference call Friday was initiated to "dispel" confusion regarding reports that suggested the company had drawn down a credit line to pay off its short-term commercial paper obligations, indicating potential liquidity problems. Kumar said the firm drew $600 million from one of its credit lines, to voluntarily pay off another credit line after its $1 billion debt offering was canceled. The company had scheduled to pay off the first line of credit with money from the debt offering. Kumar said that the payment was not made in response to anyone's request to pay down debt. In fact, the company already has paid off about $400 million of debt so far this year, he said. Kumar also noted that he does not know when or if Moody's will downgrade the firm's debt but said the facts support maintaining the current rating as Standard & Poor's has done. In addition, Kumar said he flatly rejects any suggestion that the company has been using inappropriate accounting methods to boost its stock price and said its revenue-recognition practices are some of the most conservative in the industry. Contrary to news reports, Kumar said the company did not ask analysts to use pro forma pro rata earnings, saying that that model was merely provided as a convenience. While the company has asked Thomson Financial First Call to use generally accepted accounting principles earnings, the research firm has indicated that most analysts still want to use pro forma pro rata numbers, Kumar said.