Dell may have mislead current and former employees who invested in Dell stock in a Dell sponsored retirement plan by concealing the fact that the SEC was investigating Dell's revenue recognition policies.
This is a ERISA class action lawsuit against Dell alleging that Dell violated federal securities laws by reporting inflated financial results, including its accrual and reserves.
The class action lawsuit alleges that Dell concealed that the SEC was investigating Dell's revenue recognition and accounting practices. Dell began reducing sales and profit projections as Dell began missing its own revenue, EPS and unit sales growth targets, causing significant declines in its stock price. In order to support Dell's stock price, Dell continued concealing the full extent of Dell's problems and promising a quick turnaround.
The class action complaint further alleges that on or around August 17, 2006, Dell announced its fifth consecutive quarter of disappointing results, again significantly missing its revenue and EPS targets. Dell also revealed that the SEC had begun investigating its revenue recognition and accounting practices in August 2005, and in connection with its own internal accounting review it had recently discovered information that raised potential issues relating to certain periods prior to fiscal 2006. Dell also disclosed that its Audit Committee was undertaking a full review. Finally, on September 11, 2006, defendants disclosed that Dell would not be able to file its interim financial report for its second quarter of 2007 and that the U.S. Attorney's Office for the Southern District of New York had served Dell with a subpoena requesting documents concerning its accounting and financial reporting between 2002 and 2006.
Name (Stock Symbol)
Dell, Inc. and its subsidiaries engage in the design, development, manufacture, marketing, sale, and support of computer systems and services worldwide.
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