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SEC Formally Investigates IBM
glhturbo writes "IBM announced Thursday that it had received notice of a formal, nonpublic investigation by the Securities and Exchange Commission (SEC) concerning the company's disclosures relating to Q1 2005 earnings and expensing of equity compensation. According to the article, there has been a non-formal investigation going on since June 2005. Both articles indicate that it doesn't mean IBM has broken any laws, so we'll see what comes of it."
Not necessarily, IIRC. Especially when determining the value/depreciation of assets, some firms apparently keep different sets of books: one set that is legally required for government agencies, and a different set that the firm believes is more useful for making decisions. I don't see anything wrong with this in itself, but it can obviously get you into trouble if you start reporting to the government from the wrong set of books.
At least, that's what my accounting teacher said way back when I was in high school. YMMV.
http://outcampaign.org/
about 4 - 5 years ago I was working on a contract for a *major* UK company, and our preferred platform was BEA's weblogic commerce suite. IBM were their rival with websphere. The customer's platform was Sparc/Solaris. IBM won the deal to supply software. When the dev kit turned up, it was for Windows NT, and we were told Solaris wasn't quite finished, but at least we could get started!
a month later we had our new shiny Sun servers up and running, all ready for a fresh websphere install. IBM still said it wasn't ready... after a lot of pressure, they admitted that at the time of selling us their product, websphere had never actually been run on sparc/solaris, and they only started porting it for us a month ago.
our customer, after seeing if there was any hope of IBM actually having a fully tested solaris version in time for their launch date, cancelled the order and placed it with BEA.
Whilst many software companies sell stuff that's still in beta in the hope it will be finished by the time the deal is struck and shipped, in this case IBM basically lied outright about the existence of the software at all!
Many recent SEC investigations have drawn much media attention and then closed with 'no action needed'. Wall Street market manipulation? This may be one of those. If you trust the SEC to do the right thing, read on.
Could be to distract attention from the biggest problem since the S&L debacle/regulatory failure of the 80's. (Almost destroyed financial system at taxpayer expense.)
The SEC has been ignoring and covering up 'naked shorting' by hedge funds. The problem is huge and is part of the Refco blowup. (Remember several months ago when the media was afraid of a wide-spread hedge fund blowup that could affect the whole market?)
Now, before anyone says that shorting is perfectly legal, let me say, yes, it is. But naked shorting is not, and hasn't been since 1934. It is also called "Failure-to-deliver" and if you want to take the red pill, start here:
http://www.thesanitycheck.com/
http://www.investigatethesec.com/
http://www.ncans.net/
http://www.businessjive.com/
http://www.faulkingtruth.com/