Dell coughs up €77m to settle SEC probe
PC maker Dell and its founder and CEO Michael Dell have each agreed to settle with the US Securities and Exchange Commission (SEC) in response to a fraud investigation.
Dell has agreed to pay a $100 million (€77.4 million) settlement, and Michael Dell $4 million, to bring the matter to a close, though neither admitted being guilty of the alleged fraud, WSJ.com said.
The company had been accused of deliberately hiding the effect on earnings of major exclusivity payments received from Intel over much of this decade.
These payments were the only reason Dell made its profit estimates for the quarters from 2002 to 2006, the SEC alleges.
In the first quarter of 2007 alone, Intel's payments to Dell amounted to $720 million – 76% of the company's operating profit, the Commission said.
While Dell had been accused of other financial misrepresentations, Michael Dell was being investigated only due to his role in the Intel allegations.
Intel's practice of paying PC makers to source the vast majority of chips from the company has been the subject of several investigations already.
Last year, the company was forced to pay a record €1 billion fine after an EC investigation into the practice, and the company has had to pay another $1.25 billion to settle an antitrust lawsuit filed by rival AMD.
Dell’s stock on the Nasdaq has remained resilient since the news broke. After an initial dip following the announcement, the stock gained slightly in both regular and after hours trading to $13.51.