Dell pays $100m penalty to settle accounting fraud charges

by Kevin Reed

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23 Jul 2010

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Dell has paid $100m (£65m) to settle SEC allegations of accounting fraud.

The SEC also charged Dell chairman and CEO Michael Dell, former CEO Kevin Rollins and former CFO James Schneider for their roles in the disclosure violations.

It had alleged that Dell had failed to disclose to investors large exclusivity payments received from Intel to not use central processing units from Intel's main rival. These payments helped Dell to meet its targets, rather than its management and operations.

When the payments were cut, it alleged Dell again misled investors by failing to disclose the true reason behind the company's decreased profitability.

On top of Dell's penalty to settle the charges, Michael Dell and Rollins each agreed to a $4m penalty and Schneider $3m – without admitting to or denying the charges.
Former regional vice president of finance Nicholas Dunning, and former assistant controller Leslie Jackson, agreed to settle charges of improper accounting.

"Accuracy and completeness are the touchstones of public company disclosure under the federal securities laws,” said Robert Khuzami, Director of the SEC’s division of enforcement.

“Michael Dell and other senior Dell executives fell short of that standard repeatedly over many years, and today they are held accountable.”

In their settlement offers, Schneider, Dunning and Jackson consented to being suspended from appearing or practicing before the SEC as an accountant, with the right to apply for reinstatement after five years for Schneider and three years for Dunning and Jackson.

Further reading:

Dell brings in accounting ethics code

SEC launches formal investigation into Dell

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