Computer maker Dell Inc is paying US$100 million to settle civil charges that it fraudulently used payments from Intel to pump up its profits to meet Wall Street targets over five years, the government said on Thursday.
Under the settlement with the Securities and Exchange Commission (SEC), company chairman and CEO Michael Dell also agreed to pay a separate US$4 million civil penalty.
The settlement culminated a five-year investigation by the agency. While the US$100 million fine was far from the largest penalty levied by the SEC, the decision to charge a sitting chief executive of a major company and reach a seven-figure settlement with him is rare.
The SEC had accused Michael Dell, former CEO Kevin Rollins and former chief financial officer James Schneider of playing a role in the company’s alleged violations of disclosure laws. Schneider and two other former executives were charged with taking part in the alleged fraudulent accounting.
Dell, based in Round Rock, Texas, is the world’s third-largest PC maker behind Hewlett-Packard Co and Taiwan’s Acer Inc (宏碁). The company’s net income was US$441 million in its fiscal first quarter this year, which ran from February through April.
The SEC said the company also failed to disclose to investors large payments it received from Intel Corp in exchange for not using central processing units made by Intel’s main rival, Advanced Micro Devices Inc.
Those payments enabled Dell to meet its quarterly earnings targets, the agency said.
After Intel stopped the payments, Dell again misled shareholders by not disclosing the real reason its profits had dropped, according to the SEC.
The company, Michael Dell, Rollins and Schneider falsely portrayed the means by which the company met or surpassed earnings targets from 2001 through 2006, the SEC said in a civil lawsuit.
Without the payments from Intel, the agency said, Dell would have missed analysts’ estimates in every quarter during that span.
The company and Michael Dell neither admitted nor denied wrongdoing. However, they did agree to refrain from future violations of the securities laws.
The company also agreed to improve its disclosure process by hiring an outside consultant and expanding its training of employees.
The presiding director of Dell’s board, former senator Sam Nunn, issued a statement saying the board believes that the settlement is in the best interests of the company, its customers and shareholders.
The board “reaffirms its unanimous support for Michael Dell’s continued leadership and the management team in its ongoing commitment to transparent accounting, integrity in financial reporting and strong corporate governance,” Nunn said.
Michael Dell said: “We are pleased to have resolved this matter. We are committed to maintaining clear and accurate reporting of our periodic results, supporting our customers and executing our growth strategy.”
The SEC also named Rollins, Schneider, former regional vice president of finance Nicholas Dunning and former assistant controller Leslie Jackson in the lawsuit.
Rollins agreed to pay a US$4 million civil penalty. Schneider is paying a US$3 million penalty as well as US$83,096 in restitution and US$38,640 in interest. Dunning is paying a US$50,000 penalty. In addition, Schneider agreed to a five-year suspension from working as an accountant for a public company; Dunning and Jackson agreed to three-year bars.
The government is aiming to recruit 1,096 foreign English teachers and teaching assistants this year, the Ministry of Education said yesterday. The foreign teachers would work closely with elementary and junior-high instructors to create and teach courses, ministry official Tsai Yi-ching (蔡宜靜) said. Together, they would create an immersive language environment, helping to motivate students while enhancing the skills of local teachers, she said. The ministry has since 2021 been recruiting foreign teachers through the Taiwan Foreign English Teacher Program, which offers placement, salary, housing and other benefits to eligible foreign teachers. Two centers serving northern and southern Taiwan assist in recruiting and training
WIDE NET: Health officials said they are considering all possibilities, such as bongkrekic acid, while the city mayor said they have not ruled out the possibility of a malicious act of poisoning Two people who dined at a restaurant in Taipei’s Far Eastern Department Store Xinyi A13 last week have died, while four are in intensive care, the Taipei Department of Health said yesterday. All of the outlets of Malaysian vegetarian restaurant franchise Polam Kopitiam have been ordered to close pending an investigation after 11 people became ill due to suspected food poisoning, city officials told a news conference in Taipei. The first fatality, a 39-year-old man who ate at the restaurant on Friday last week, died of kidney failure two days later at the city’s Mackay Memorial Hospital. A 66-year-old man who dined
‘CARRIER KILLERS’: The Tuo Chiang-class corvettes’ stealth capability means they have a radar cross-section as small as the size of a fishing boat, an analyst said President Tsai Ing-wen (蔡英文) yesterday presided over a ceremony at Yilan County’s Suao Harbor (蘇澳港), where the navy took delivery of two indigenous Tuo Chiang-class corvettes. The corvettes, An Chiang (安江) and Wan Chiang (萬江), along with the introduction of the coast guard’s third and fourth 4,000-tonne cutters earlier this month, are a testament to Taiwan’s shipbuilding capability and signify the nation’s resolve to defend democracy and freedom, Tsai said. The vessels are also the last two of six Tuo Chiang-class corvettes ordered from Lungteh Shipbuilding Co (龍德造船) by the navy, Tsai said. The first Tuo Chiang-class vessel delivered was Ta Chiang (塔江)
EYE ON STRAIT: The US spending bill ‘doubles security cooperation funding for Taiwan,’ while also seeking to counter the influence of China US President Joe Biden on Saturday signed into law a US$1.2 trillion spending package that includes US$300 million in foreign military financing to Taiwan, as well as funding for Taipei-Washington cooperative projects. The US Congress early on Saturday overwhelmingly passed the Further Consolidated Appropriations Act 2024 to avoid a partial shutdown and fund the government through September for a fiscal year that began six months ago. Under the package, the Defense Appropriations Act would provide a US$27 billion increase from the previous fiscal year to fund “critical national defense efforts, including countering the PRC [People’s Republic of China],” according to a summary