Dell to Pay $100M to Settle Securities Fraud Case

By Jason Beahm on July 28, 2010 | Last updated on March 21, 2019

Dell is under fire after settling with the Securities and Exchange Commission for $100 million. The computer maker was accused in the securities fraud case of misleading investors by taking money paid by Intel to inflate the company's quarterly earnings statements. Company executives then allegedly used the Intel payments to help surpass expectations on Wall Street. The SEC further alleged that Intel made payments to Dell to get them not to use Advanced Micro Devices' chips and that the payments accounted for a staggering 76% of Dell's income in 2007. As is typical in SEC settlement agreements, Dell did not admit to the accusations.

Many analysts have said that Intel subsidized a large segment of the computer manufacturing industry. It worked as follows: Intel would pay Dell through rebates as long as Dell agreement not to use computer chips made by AMD. The arrangement is currently the subject of federal and state inquiries.

Christopher Conte, of the S.E.C.'s enforcement division announced the $100M settlement in a statement, "Dell manipulated its accounting over an extended period ... Dell was only able to meet Wall Street targets consistently during this period by breaking the rules."

Intel company spokesman Chuck Mulloy sought to distance the chip maker from the case, stating that Intel is "not a party to this case." He offered no comment on the settlement, further stating that "any characterizations of Intel's relationship with Dell or its programs with Dell have not been tested or adjudicated in court. This is strictly a settlement between Dell and the SEC."

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