IBM Reaches Settlement With SEC
IBM (NYSE: IBM) today announced that it has reached an agreement with the U.S. Securities and Exchange Commission (SEC) to resolve all issues regarding two previously disclosed matters:
The Wells Notice the company received in January 2004 from the staff of the SEC in connection with the staffís investigation of Dollar General Corporationís 2000 financial statements; and
The SECís investigation involving IBMís revenue recognition in 2000 and 2001 primarily concerning certain types of client transactions. This investigation began in June 2003 and the company believes it arose out of the Dollar General investigation referenced above.
Dollar General Corporation is a client of IBMís Retail Store Solutions unit, which markets and sells point-of-sale products.
IBM has consented, without admitting or denying any wrongdoing, to entry of an administrative order by the SEC directing that IBM cease and desist from committing or causing any violations of certain provisions of the federal securities laws and related SEC rules. An IBM employee in the companyís Sales and Distribution unit also has resolved all issues with the SEC relating to the separate Wells Notice he received in connection with the staffís investigation of Dollar General Corporation.
In connection with the agreement, IBM will pay $7 million into a fund to be established in connection with the SECís action against Dollar General. IBM will not restate any of its business results due to this settlement. The SECís administrative order notes that the revenue recognition errors at issue were, in many cases, errors with respect to the recognition of revenue as between quarters, and in most cases, were discovered and corrected by IBM in advance of the Commissionís investigation.
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