Dell Proposes Settlement With SEC Over Intel Claims

Jeffrey Burt,

Michael Dell has given the Securities and Exchange Commission a proposal that will draw a line in the sand over its relationship with Intel

The five year accounting investigation by the federal agency, the Securities and Exchange Commission (SEC), could be about to end after Dell executives proposed settlement plans.

The company announced the update 16 July. According to Dell, staff members at the SEC have taken the proposed settlements from the company and Chairman and CEO Michael Dell, and will recommend the settlement to the SEC.

Any settlements would have to be approved by the SEC and a US District Court. Dell already has put aside $100 million (£65 million) to cover the costs of settling the probes.

Five Year Probe

The SEC began its investigation of Dell in 2005 over accounting practices in regard to the company’s relationship with chip maker Intel. A newer probe over the two companies’ dealings more directly involves Michael Dell.

The investigation already has led Dell to restate its financial results from 2003 and into 2007, and the company also is revising its fiscal 2011 first-quarter numbers to reflect the possible $100 million (£65 million) settlements.

According to Dell, the settlements would cover alleged violations of federal securities laws, including antifraud provisions. A Dell statement last month said that any settlement would not include an admission or denial of guilt, and would not preclude Michael Dell from continuing to run his namesake company.

The allegations related to Michael Dell reportedly surround how the company accounted for rebates and payments it received from Intel in 2008.

Intel Relationship

Intel’s relationship with Dell and other OEMs has come under scrutiny from several agencies. Intel currently is being sued by the Federal Trade Commission and the N.Y. State Attorney General’s Office for what investigators say are anti-competitive practices designed to influence systems makers to limit the use of competing products from Intel rival Advanced Micro Devices.

FTC officials say Intel has continued such practices in its dealings with graphics chip maker Nvidia.

Intel also was fined $1.45 billion (£940 million) by the European Commission last year, a fine that the chip maker is appealing, and settled with AMD in a deal that includes a $1.25 billion (£810 million) payment to its rival.

Intel officials have denied the allegations. In June, Intel and the FTC suspended legal proceedings in their case to give the two sides room to negotiate a settlement. The suspension is scheduled to last until 22 July.