WASHINGTON: Computer maker Dell Inc is paying US$100mil (RM320mil) to settle civil charges that it used fraudulent accounting to meet Wall Street earnings targets, the government announced.
Under the settlement with the Securities and Exchange Commission (SEC), company chairman and CEO Michael Dell also agreed to pay a separate US$4mil (RM12.8mil) civil penalty.
While the fine was far from the largest penalty levied by the SEC, the decision to charge a sitting chief executive of a major company and reach a seven-figure settlement with him is rare.
Michael Dell is one of the most prominent figures in the technology industry, credited for revolutionising the PC market by making the computers cheap and accessible.
The SEC said the company also failed to disclose to investors large payments it received from Intel Corp in exchange for not using equipment made by Intel’s main rival, AMD Inc.
Those payments enabled Dell to meet its quarterly earnings targets. After Intel stopped the payments, Dell again misled shareholders by not disclosing the real reason its profits had dropped, the SEC said.
Michael Dell and four former executives falsely portrayed the means by which the company met earnings targets from 2002 through 2006, the SEC said in the lawsuit. Without the payments from Intel, the agency said, Dell would have missed analysts’ estimates in every quarter during that time.
The company and Michael Dell neither admitted nor denied wrongdoing. But they did agree to refrain from future violations of the securities laws. The company also agreed to improve its disclosure process by hiring an outside consultant and expanding its training of employees.
The SEC also named former Dell CEO Kevin Rollins, former chief financial officer James Schneider, former regional vice-president of finance Nicholas Dunning and former Assistant Controller Leslie Jackson in the suit.
Rollins agreed to pay a US$4mil civil penalty. Schneider is paying a US$3mil (RM9.6mil) penalty as well as US$83,096 (RM265,907) in restitution and US$38,640 (RM123,648) in interest.Dunning is paying a US$50,000 (RM160,000) penalty.
The SEC said its investigation of the Dell matter and the possible role of other individuals continues.
“Accuracy and completeness are the touchstones of public company disclosure under the federal securities laws,” SEC enforcement director Robert Khuzami said in a statement.
“Michael Dell and other senior Dell executives fell short of that standard repeatedly over many years, and today they are held accountable.” — AP