Dell settles for $100m with SEC

Cosy arrangement with Intel costs company dear
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US financial regulator the Securities and Exchange Commission (SEC) has agreed on a settlement with Dell over accounting violations relating to payments taken from Intel.

By settling, the US-based PC builder is not admitting to the allegations made in the SEC's investigation of the company. However Dell said that it had already initiated a number of remedial measures to address the company's financial accounting practices. 

"Accuracy and completeness are the touchstones of public company disclosure under the federal securities laws. Michael Dell and other senior Dell executives fell short of that standard repeatedly over many years, and today they are held accountable," said SEC director of enforcement Robert Khuzami.

The SEC filing alleged that "Intel began to provide additional 'rebates' to Dell and other personal computer makers that were not related to the contractual marketing program and that were different in character from ordinary course price discounts. No one disclosed these payments to the market."

The complaint relates to Intel practices of rewarding exclusive reselling of Intel CPUs with rebates through a number of programs, one of which paid a lump sum of 6% of the amount paid for CPUs. The SEC alleged that Dell then used these funds to meet earnings shortfalls. 

These practices were also the subject of a private anti trust lawsuit against Intel by rival CPU-maker which ultimately resulted in a $1.25b settlement.

The SEC case, however, relates to the requirements of financial transparency for public traded companies and as such is more concerned with the way Dell failed to disclose the payments and used them to prop up financial performance in weak quarters. 

For his part, the agreement also included a $4m settlement from chairman Michael Dell. The company issued a statement saying: "Dell’s Board reaffirms its unanimous support for Michael Dell’s continued leadership, and the management team in its ongoing commitment to transparent accounting, integrity in financial reporting and strong corporate governance."

Dell now ships a number of systems with AMD processors.

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