Dell inches to­ward clo­sure in SEC in­ves­ti­ga­tion

Af­ter propos­ing set­tle­ments, com­pany, ceO await ap­proval

Austin American-Statesman - - BUSINESS & PERSONAL FINANCE - By Kirk Laden­dorf

Dell Inc. said Fri­day that the com­pany and CEO Michael Dell are mov­ing closer to set­tling a long-term in­ves­ti­ga­tion by the Se­cu­ri­ties and Ex­change Com­mis­sion that in­volves past ac­count­ing ir­reg­u­lar­i­ties at the com­pany and a fail­ure to dis­close re­bate pay­ments from In­tel Corp., its most im­por­tant chip sup­plier.

Dell said it and Michael Dell have made for­mal set­tle­ment pro­pos­als to the SEC’s staff, which has agreed to rec­om­mend them to the com­mis­sion for ap­proval. There was no word Fri­day on the terms of the agree­ment or when the com­mis­sion will de­cide on them.

Dell has pre­vi­ously said any set­tle­ment in­volv­ing Michael Dell would not pre­vent him from con­tin­u­ing as a di­rec­tor and of­fi­cer of the com­pany.

In June, Dell dis­closed that it had taken a charge of $100 mil­lion against first-quar­ter earn­ings to cover the com­pany’s po­ten­tial set­tle­ment costs in the case. Those an­tic­i­pated ex­penses do not in­clude the set­tle­ment that Michael Dell is propos­ing.

The SEC in­ves­ti­ga­tion into ac­count­ing prac­tices started in 2005. Dell did its own re­view and in 2007 re­stated more than four years of

Con­tin­ued from B5 fi­nan­cial re­sults for the pe­riod be­gin­ning in Fe­bru­ary 2002. The com­pany dis­closed that it had over­stated sales by a to­tal of $359 mil­lion and over­stated prof­its by $92 mil­lion.

Dell said last month that the SEC’s in­ves­ti­ga­tion had ex­panded to in­clude the com­pany’s and Michael Dell’s fail­ure to dis­close bil­lions of dol­lars in re­bate pay­ments from In­tel be­tween 2002 and 2006. The pay­ments were made by In­tel in re­turn for Dell’s agree­ment to use In­tel, and not com­peti­tor Ad­vanced Mi­cro De­vices Inc., as its ex­clu­sive provider of com­puter pro­ces­sor chips, the so-called brains of per­sonal com­put­ers.

The com­pany said in June that the in­ves­ti­ga­tion of Michael Dell con­cerns “negli- gence-based fraud charges as well as other non-fraud­based charges” tied to Dell’s fail­ure to dis­close the In­tel pay­ments.

Dell also on Fri­day ad­journed its an­nual share­hold­ers meet­ing un­til Aug. 12 to give share­hold­ers the chance to re­view the terms of the set­tle­ments.

Michael Dell

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