IBM stock drops after release of SEC report
Shares of IBM dropped over 5% after a report of an investigation by the Securities and Exchange Commission was made public.
But after Wall Street closed the SEC issued a statement saying it had closed the inquiry and would take no action against IBM.
The stock fell to $84.19, a low unseen since December 2000. IBM shares, which traded solidly above $100 at the start of April, have fallen 30% this year, including a sharp drop of 10% on Monday after the company said it expected to post a massive first-quarter revenue shortfall.
Earlier in the day, accounting newsletter SEC Insight said it obtained a letter from the SEC, which stated it had initiated a preliminary inquiry into IBM on 15 February.
The newsletter said it believed the SEC letter marked the start of a new probe tied to a New York Times report about how IBM used the sale of an optical transceiver unit to help it meet its fourth-quarter earnings goal.
IBM sold the business to telecom equipment manufacturer JDS Uniphase on 19 December.
The SEC said in a statement: ‘Regarding the reports of a preliminary inquiry into IBM, the SEC staff opened an inquiry and shortly thereafter closed it without action.’
An IBM spokeswoman said the company was unaware of the SEC Insight Report and explained the company does not comment on its relationship with government agencies.