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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."
I've unfortunately had personal experience working with IBM. I don't know why they do it, but they are the greediest company I've ever seen in action up close and personal. I've personally seen their project managers fake work, make work when there was none, and drag a project out for years. Maybe you all think that's business as usual, but I thought it was pretty bad.
It's not because they're tech companies per se; a lot of these investigations are due to shady accounting. Indeed, many of the major accounting firms have been investigated, particularly for possible interactions between their accounting services and audit divisions. One of the common irregularities has been not correctly accounting for compensation in the form of stocks and options as expenses: this is detrimental to existing shareholders and the IRS. Tech companies tend to prefer to reinvest in their own business rather than pay out dividends. This is because the industry has a lot of small, quickly growing companies, and the others follow suit in their practices because it benefits managers. The result is that stock is valued for its resale price, rather than as a source of contuining income the company has to pay out--so stock-based compensation has been seen as a way to essentially print money! The problem is that unscrupulous managers can manipulate figures to make it look like the stock or options cost them less than they did. So you see, it really has nothing to do with technology at all.
THE NERD IS THE COMPUTER.
(and yes, I do realize you were being facetious)
These SEC and New York AG investigation orgies are more about politics than about protecting the public from evil corporate behavior. For example, in the case of Eliot Spitzer, the New York Attorney General, it's about how to use his job as a springboard to the governorship. He talks a tough line about long time insurance industry practices that are of questionable harm, caused the resignation of AIG CEO Hank Greenberg, and is continuing to go after this company as though it's the incarnation of evil. He waxes eloquent about how these companies hurt the common consumer, when in fact he has little grounds for such a claim. But it plays well on network news.
The SEC can pretty much go after anyone they feel like. Any large company is bound to have a few irregularities in their procedures. Whether this merits the kind of microscopic scrutiny that the SEC has been utilizing in recent years is another question. IBM is a company with a history of being completely cooperative with the feds when it comes to monopolistic practices. Intel and Cisco are similar. They announce full cooperation, make their procedures transparent, and the feds either go away or slap them on the wrist with a fine of a few million for some technicality.
We in the U.S. are our own worst enemies; while our corporations labor under a host of rules and regulations that are often contradictory and sometimes counter-productive, companies in places like China are charging full steam ahead, eating our lunch. It riles me to read about yet another strike for "fair pay and working conditions" or another city trying to levy new taxes on its local industries even as overseas firms proceed to take over nearly every manufacturing sector but military related.
I think the United States should take one state and declare it a Special Economic Zone where manufacturing can be conducted tax free and with only basic checks and controls. Keep the "watchdog" agencies like the SEC off their backs and just let them compete. We will probably be surprised at the competition and productivity that will result.
it's = "it is"; its = possessive. E.g., it's flapping its wings.
I'd like to add to Roydd's excellent analysis that accounting manipulations aren't always to apparently decrease costs. While obviuosly you want to emphasize the highest profits possible when talking to investors, you want just the opposite when talking to the IRS. Now, of course the honest thing to do is to give them both the same numbers, but people like to game their analysis to make investors think they're making lots of money, while the IRS thinks they're destitute and owe very little in taxes. Unfortunately, this is a survival strategy, so it persists.
...so that's why Apple is switching over to Intel chips.
And now you know the rest...of the story.
Authority questions you. Return the favor.
This is a complete non-story.
/. really had no substance whatsoever.
Every corporation half of IBM's size gets audited by the SEC, IRS, and whatever else quarterly if not monthly if not weekly if not daily.
The article linked by
I've never heard of reed electronics (the site where the article is hosted). after looking at thier site a bit, all of their links seem to be geared more towards getting hits off keywords and links. I certainly couldn't find anything newsworthy there.
this is weak. have the spammers taken over?
gonna go watch my karma oscillate now
IBM ftw.
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/
I work for IBM. I'm not worried. As other posters have stated, this appears to be a non-story. In fact, this is the first I've heard of this.
Martha Stewart was never charged with securities fraud or insider trading -- well, actually she was, but the charges were dropped quickly when the investigation didn't turn anything up. What sent Martha to prison for five months followed by five months of home confinement was lying to federal investigators. So I guess the lesson here is that the way to cover your ass is to not attempt to cover your ass; even if they don't find anything they can still get you if you lie to them. Remember that IBM: don't tell the SEC there was a stop-loss order in effect unless there really was a stop-loss order in effect.
If it's not one thing it's your mother.
Complaint to the SEC about the activities arising from the SCO lawsuits
I think the SEC is targeting the wrong company in the SCO vs. IBM lawsuit.
Deze sig is in 't Nederlands geschreven.
That's what happens when you read Slashdot.
Strength through redundancy and over-design
Some tricks.
IT is the weirdest industry around.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
OK,
According to the article, it looks like IBM was looking to start to expense stock options prior to the new SEC rules taking effect. If looks like they sprung it on everyone at the last minute which put analysts in an uproar because they had to readjust their numbers at the last minute, then the expenses were not in line with what the analysts predicted (were actually less).
Simply put, IBM tried to do the right thing for its investors and the public but flubbed it and the government now seems hell bent to punish IBM (They have been looking for something for years regarding investor relations) and will not stop until they get something, even if it is a technicality. This allows them to say that they are going after the big guys while getting the Enron execs off the hook.
IBM really did nothing wrong. They simply followed public opinion and did what the SEC was going to require them to do anyways. In actuality, the SEC should use this to guide other companies into complying with the new rules since IBM was the first. Instead, they are going to punish IBM.
Something bad may have happened at IBM.
*sigh* Are there any real news out there?
Martha Stewart was never charged with securities fraud or insider trading -- well, actually she was, but the charges were dropped quickly when the investigation didn't turn anything up. What sent Martha to prison for five months followed by five months of home confinement was lying to federal investigators.
Martha & Scooter Libby, BTW, both made the same mistake: When talking to investigators, they made the MISTAKE of assuming that they had done something illegal, when in fact they had not.
In Martha's case, she assumed that she was guilty of insider trading, when in fact she was not: She traded on information supplied by her stock brocker, WHICH IS NOT ILLEGAL. In Scooter Libby's case, he assumed that he had done something illegal by talking with the press, BUT IN FACT HE HAD DONE NOTHING ILLEGAL WHATSOEVER.
Slashdotters: If you ever find yourself being interrogated by a law enforcement officer [or a local/state/federal district attorney], begin the conversation by asking, "Why are we here? What crime do you believe has been committed? Would you please show me the specific statute that you believe has been violated?"
If the LEOs or DAs won't answer those questions, then THEY ARE ON A FISHING EXPEDITION and [assuming no one's life or health is in danger] you have absolutely no duty whatsoever to answer their questions.
But for the sake of goodness, do not open your mouth and start lying to them. Just tell them the conversation is over and get up and leave.
I don't feel my rights have been violated by either IBM's way of expensing equity compensation or the SEC's investigation of it.
No doubt, I'm just numb to creeping fascism. You know, first they came for those expensing equity compensation, but I didn't speak up because I use a different method. Next they came for those using Last-In-First-Out inventory accounting, but I didn't speak up because I use FIFO...
Zonk, you're gaining ground on Cliff and timothy as the worst Editor yet.
Advice: on VPS providers
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/
"Meet me back in the boardroom, where someone WILL get fired."
Has there been no news on that SEC investigation (into TSG et al)? I haven't heard anything.
Joe Llywelyn Griffith Blakesley
[This post is in the public domain (copyright-free) unless otherwise stated]
Look how successful all the companies manufacturing along the Texas/Mexico border were. The sad fact is that China is only going ahead because of its willingness to let US debt fund its manufacturing capacity, and its huge pool of people who will work for peanuts because the alternatives are even worse. If regulation and taxation are so bad, why are states like Massachusetts and New York, with European levels of taxation and regulation, so successful while there are so many poor Red states? I think you need to get a clue about economic replacement (the way that the West stays on top by replacing low added value industries like assembly operations with high added value like bioscience and advanced engineering).
Pining for the fjords
that M$ or one of IBM's rival chip companies has something to do with this? M$ could be pissed that IBM is really supporting the open-source movement with Linux and OOo, or maybe Intel is pissed that even with the soon coming of their new line of procs that IBM's Cell and Niagra procs will blow the Yonah out of the water?
Feel free to think I'm reading between the lines, maybe I am, but if it is actually a situation such as one of the above that I described, feel free to add anything else you can think of...