Dell on Thursday said that it had reached a settlement with the U.S. Securities and Exchange Commission (SEC) resolving the previously-disclosed SEC investigation into Dell’s disclosures and alleged omissions prior to fiscal 2008 regarding certain aspects of its commercial relationship with Intel Corp. and into separate accounting and financial reporting matters. Meanwhile, the Federal Trade Commission said that it would take longer than expected to investigate the case against Intel.
The SEC's complaint filed with the U.S. District Court alleges that the company engaged in disclosure and accounting practices that violated certain federal securities laws and SEC rules (including antifraud provisions) during the period from 2001 to 2006. Under its settlement, the company has consented to a permanent injunction against future violations of such federal securities laws and SEC rules. The company also has agreed to perform certain undertakings, including retaining an independent consultant, to enhance its disclosure processes, practices and controls. The company’s settlement requires it to pay a civil monetary penalty of $100 million, which have already been reserved.
Although the agreement may seem local, it may play some role in the ongoing dispute between Intel Corp. and the U.S. Federal Trade Commission. Although it was reported earlier this week that the settlement had been reached, the FTC announced Wednesday that it had entered an order extending by two weeks the temporary withdrawal of its case against Intel Corp. from adjudication to allow the commission more time to consider a proposed settlement. The original order was issued on June 21 and was set to expire on Friday, July 23 at 12:01 a.m. This action extends the withdrawal until 12:01 a.m. on Friday, August 6.
The SEC has agreed to settlements with both the company and Michael Dell, the company’s chairman and chief executive officer. The company and Mr. Dell entered into the settlements without admitting or denying the allegations in the SEC’s complaint, as is consistent with standard SEC practice. The settlements with the company and Mr. Dell are subject to approval by a U.S. District Court.
The SEC’s allegations with respect to Mr. Dell and his settlement are limited to the alleged failure to provide adequate disclosures with respect to the company’s commercial relationship with Intel prior to fiscal 2008. Mr. Dell’s settlement does not involve any of the separate accounting fraud charges being settled by the company and others. Mr. Dell’s settlement is limited to claims in which only negligence, and not fraudulent intent, is required to establish liability, as well as secondary liability claims for other non-fraud charges. Under his settlement, Mr. Dell has consented to a permanent injunction against future violations of these negligence-based provisions and other non-fraud based provisions of certain federal securities laws and SEC rules. In addition, Mr. Dell has agreed to pay a civil monetary penalty of $4 million. Michael Dell will remain at the helm of computer giant.