, Inc. has announced that the staff of the U.S. Securities and Exchange Commission (SEC) has been conducting an investigation related to NetEase's restatement of its financial statements for the year ended December 31, 2000.

NetEase today announced that it has received a "Wells notice" from the SEC staff which states that the staff intends to recommend that the SEC bring a civil injunctive action against the Company for alleged violations of the federal securities laws, which action NetEase believes will be in connection with the circumstances relating to the restatement. NetEase believes that any such action will relate only to conduct that occurred more than two and a half years ago and has no relation to its present management or operations.

Under SEC procedures, NetEase has the opportunity to respond to the SEC staff before the staff makes a formal recommendation regarding any action to be taken against NetEase by the SEC. NetEase says it will continue to fully cooperate with the SEC in this matter and attempt to resolve it as soon as possible.


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