Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Dell settles fraud charges for $100 million

By David Goldman, staff writer

NEW YORK (CNNMoney.com) -- Dell has agreed to pay $100 million to settle fraud charges from the Securities and Exchange Commission, the SEC announced on Thursday, ending a five-year old case that has plagued the company and its chief executive, Michael Dell.

The government regulator said Dell did not disclose to its investors "large exclusivity payments" that chipmaking giant Intel (INTC, Fortune 500) made to Dell in exchange for Dell's agreement not use chips made by rival chipmaker AMD (AMD, Fortune 500). The payments were so large that they made up 76% of Dell's operating income in the first quarter of 2007, and double-digit percentages of its earnings in several other quarters.

The SEC charges against Dell extend to CEO Michael Dell.

"It was these payments, rather than the company's management and operations, that allowed Dell to meet its earnings targets," the SEC said in a prepared statement.

The SEC also found that founder Michael Dell, along with several other high-ranking company executives, were complicit in the disclosure violations. Mr. Dell agreed to pay a $4 million settlement out of his own personal funds.

The company had acknowledged previously that Michael Dell was a target of the SEC's investigation, but the company's board said he would be allowed to continue as CEO and chairman of the board.

The government first launched an investigation into the computer giant in August 2005, alleging violations of securities laws, including fraud related to Dell's financial reporting and to its disclosures about its financial dealings with chipmaker Intel.

After an internal review that was completed in 2008, the company acknowledged accounting irregularities, and it adjusted its financial results from between 2003 and the first quarter of 2007.

Shares of Dell (DELL, Fortune 500) were unchanged after hours after rising by more than 2% during normal trading hours Thursday. To top of page

Index Last Change % Change
Dow 17,798.49 -14.90 -0.08%
Nasdaq 5,127.53 11.38 0.22%
S&P 500 2,090.11 1.24 0.06%
Treasuries 2.22 -0.01 -0.31%
Data as of 10:05am ET
Company Price Change % Change
General Electric Co 30.36 0.00 0.00%
Bank of America Corp... 17.48 0.04 0.23%
HP Inc 12.61 -0.03 -0.24%
Pfizer Inc 32.79 -0.08 -0.24%
Walt Disney Co 115.13 -3.54 -2.98%
Data as of Nov 27


Sumner Redstone, the media mogul who controls Viacom and CBS, is at the center of a legal dispute. One side says he is practically unable to make decisions for himself. The other says he is "engaged and attentive." More

Gold futures hit a low of $1,051.60 an ounce, yet another reminder of just how out of favor gold has become since its all-time high of nearly $1,890 in 2011. More

Watsi crowdfunds donations to cover healthcare costs of those in need. And it's seeing a surprising trend: micro-donations via the popular Chinese social networking app, WeChat. More

Hive, a startup funded by the UN, is tasked with getting more Americans engaged with the refugee crisis. More

Facebook just increased the amount of paid time off new dads working at its international offices can take. More