Dell removes $100m from profits over SEC probe
Dell has removed $100 million from its first-quarter profits, setting the cash aside for a potential settlement with the US Securities and Exchange Commission, which is investigating the PC giant's accounting and financial-reporting practices and its relationship with Intel.
In a statement released Thursday, the company also said that CEO Michael Dell is discussing a separate settlement with the SEC that would resolve allegations that he withheld information about the company's Intel relationship.
The SEC began its investigation in 2005, and in 2006 Dell told the world that it had launched its own internal investigation into its accounting practices and financial-reporting practices. The following year, the company spanked itself, admitting that it had manipulated its financial results between 2003 and 2006 and announcing that its income during that period - originally put at $12bn - would be reduced by between $50m and $150m.
Today, Dell said an SEC settlement would involve a civil injunctive action for alleged violations of federal securities laws, including the antifraud provisions; negligence-based fraud charges; and other non-fraud based charges related to disclosures and alleged omissions regarding its commercial relationship with Intel prior to 2008.
The company also said that the separate potential settlement between Michael Dell and the SEC would not prevent him from serving as an officer and director of a public company, and that it would be made without admitting or denying the SEC’s allegations.
“We are hopeful that these settlement discussions will achieve a comprehensive resolution in the near future. The independent directors of the Board have affirmed that Michael Dell will continue to lead the company as its Chairman and CEO, and he continues to have our complete confidence and support,” read a statement from Dell presiding director Sam Nunn. ®