The Securities and Exchange Commission filed a civil fraud suit Thursday against Xerox Corp., alleging the company hid its true financial performance from investors and violated generally accepted accounting principles for reporting revenue and profits from at least 1997 through 2000.

Xerox has agreed to pay a $10 million fine and restate earnings for those years, but the office equipment maker neither admits nor denies the SEC's allegations of accounting fraud, a company spokeswoman says.

The SEC also appears to be widening its investigation of Xerox to include KPMG, Xerox's accounting firm during the time of the revenue and profit discrepancies. Partners from KPMG have reportedly received "Wells notices" from the SEC indicating they must submit arguments to the SEC stating why they should not be charged with fraud. A KPMG spokesman wouldn't confirm that the SEC had issued such notices.

"We've been in discussions with the SEC about the possibility of a proceeding against KPMG," the spokesman says. He wouldn't elaborate.

Reports say the SEC has also sent Wells notices to former Xerox chairman Paul Allaire, former president Rick Thoman, and former CFO Barry Romeril. They too must submit arguments to the SEC stating why they should not be charged with fraud. The Xerox spokeswoman wouldn't confirm that Wells notices had been sent to the former employees.

Xerox's settlement with the SEC gives the company a 75-day extension for restating its financials for 1997 through 2000 and adjusting previously announced 2001 results.

KPMG was Xerox's accounting firm from 1971 to 2001. Xerox replaced it with rival PricewaterhouseCoopers in October.