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    why fines cannot stop corporate crime

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    why fines cannot stop corporate crime

    Post by Guest on Sat Jun 12, 2010 7:59 am

    Dell banks $100 million to settle fraud charges

    By David Goldman, staff writerJune 10, 2010: 5:49 PM ET



    NEW YORK (CNNMoney.com) -- Dell has set aside $100 million for a potential fraud settlement, the company said Thursday, as it nears a resolution with the Securities and Exchange Commission of a mysterious case that has plagued the company for more than five years.
    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. The investigation also includes allegations against the company's chief executive, Michael Dell.


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    The SEC charges against Dell extend to CEO Michael Dell.


    It is still unclear exactly what Dell did wrong. 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.
    But neither the SEC nor Dell have stated the exact nature of the charges, and the company declined to comment on the allegations.
    The company said that Michael Dell is directly implicated in the SEC's charges. He would be subject to a fine should the case be settled, but would be allowed to continue as CEO and chairman of the board.
    Dell's announcement is a sign that a resolution with the SEC is likely, said spokesman Jeff Blackburn. But he said negotiations are ongoing, and the company would not give a timeframe for when the settlement might be paid.
    In an official statement, Dell Director Sam Nunn said he is hopeful that the company can soon put the matter behind it.
    "The independent directors of the board have affirmed that Michael Dell will continue to lead the company as its chairman and CEO, and he continues to have our complete confidence and support," Nunn said.

    Shares of Dell (DELL, Fortune 500) fell more than 2% after hours after rising by more than 2% during normal trading hours Thursday

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    Re: why fines cannot stop corporate crime

    Post by Guest on Sat Jun 12, 2010 8:07 am

    I know NOTHING about this case other than what I just read above. A few things stood out to me though.
    1] Nothing improper has been proven yet but the company is setting aside 100 million. To me this says that they concede on some level that something was done wrong. It also reflects the corporate attitude to breaking the rules. Money for these fine is just set aside as a cost of doing business. In the business world it is no differnt that money alloted for facility maintaince, taxes, or payroll. It is just a column on a balance sheet and something else that they have to pay for. The idea that a financial penalty is making businesses follow the rules is absurd.
    2] The CEO would be subject to a fine but allowed to retain his position. WTF
    Assuming he did something wrong, and I am not sure that he has, where is the punishment in this? A incredibly wealthy man is asked to pay a fine with money that he does not care about anyway and nothing else changes for him. Way to go SEC. Really making a statement there.
    What if society handled other fraud / theft cases in this manner? Say someone that robs a convenience store rather than going to prison has to pay a fine proportionate to a couple % of their monthly income and we give them the gun and ski mask back. Give me a break. Corporate fraud will be reduced when the people who commit fraud are criminally accountable.

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    Re: why fines cannot stop corporate crime

    Post by Guest on Tue Jun 15, 2010 2:22 pm

    The lack of response to this post reenforces in my mind what a HUGE problem this is. Corporate crime is not all that interesting. $100 million becomes a small article that is skimmed past and no one really cares all that much. Someone could get more press driving a stolen car throught he front of a liquor store. The cost to society for corporate crime is so large that it looses its meaning. Try to comprehend what a large number $100 million is. If the lifetime earning potential of everyone that posts on this form was combined we would not be at $100 million. Add up every dollar that each of us will earn in out entire lifetime and we are not even close. ... and Dell will just pay it...... and it will be a memo line or perhaps a paragarph on an annual report... and they will still sell computers.... and no one will care that much.

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