Dell Inc. today announced that it has reached a settlement with the U.S. Securities and Exchange Commission (SEC) resolving the previously-disclosed SEC investigation into Dellâ€™s disclosures and alleged omissions prior to Fiscal 2008 regarding certain aspects of its commercial relationship with Intel Corporation and into separate accounting and financial reporting matters. The settlement terms are consistent with the settlement framework disclosed by the company on June 10, 2010.
The SEC has agreed to settlements with both the company and Michael Dell, the companyâ€™s chairman and CEO. The company and Mr. Dell entered into the settlements without admitting or denying the allegations in the SECâ€™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 complaint filed with the U.S. District Court today 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 companyâ€™s settlement requires it to pay a civil monetary penalty of $100 million. As announced in June, in its first quarter of Fiscal 2011 the company established a reserve in that amount for the potential settlement of the SEC investigation.
The SECâ€™s allegations with respect to Mr. Dell and his settlement are limited to the alleged failure to provide adequate disclosures with respect to the companyâ€™s commercial relationship with Intel prior to Fiscal 2008. Mr. Dellâ€™s settlement does not involve any of the separate accounting fraud charges being settled by the company and others. Moreover, Mr. Dellâ€™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. The settlement does not include any restrictions on Mr. Dellâ€™s continued service as an officer or director of the company.