The SEC’s staff will recommend the commission approve the proposal, Round Rock, Texas-based Dell said today in a statement. The proposal’s terms are the same Dell disclosed in June, when it said it was in discussions with the SEC. Under those, Dell would be subject to a fine, and Michael Dell would be allowed to continue as chief executive officer.
Dell, under investigation since 2005, is being probed for accounting and financial reporting issues related to its partnership with the chipmaker. The company has said it may face penalties related to alleged violations of fraud laws and failure to disclose the extent of the relationship. Dell has set aside $100 million for the settlement.
“It’s a step in the right direction,” said Aaron Rakers, an analyst at Stifel Nicolaus & Co. in St. Louis. He advises investors to buy Dell shares and doesn’t own any. The investigation had created a “degree of uncertainty” because a failure to reach a settlement could have resulted in, for example, the CEO stepping down, he said.
SEC spokesman John Nester declined to comment. Any settlement would be subject to approval by the SEC and a U.S. District Court, Dell said.
Dell, the world’s third-biggest PC maker, fell 58 cents to $13.07 in Nasdaq Stock Market trading at 4:01 p.m. New York time. The stock has declined 9 percent this year.
Dell delayed part of its annual shareholder meeting today until August 12 while it distributes information to shareholders about the settlement.
“Any time you have an SEC overhang, it’s always good to put it behind you,” said Abhey Lamba, an analyst at ISI Group in New York. Still, “it’s something from their past, and it’s not something that is on the top of investors’ minds.”
The SEC began the investigation in 2005 that moved Dell to restate results, fire workers and change its corporate governance policies. Intel, based in Santa Clara, California, has come under scrutiny by regulators who have alleged the chipmaker used payments to PC makers to dissuade customers from purchasing products from rival Advanced Micro Devices Inc.