On August 27, 2010, the SEC charged the former Chief Accounting Officer of Dell Inc., Robert W. Davis, with accounting fraud for his alleged role in Dell's materially misstated operating results for the years 2002 through 2005. For a discussion of the charges against Dell, see the Weekly Auditor Liability Bulletin dated July 30, 2010. Davis is alleged to have materially misrepresented Dell's financial results through the use of "cookie jar" reserves to cover shortfalls and to have engaged in other reserve manipulations. Davis has agreed to pay $175,000 in penalties as well as disgorgement and pre-judgment interest to settle the charges.
The SEC also charged Dell's former Assistant Controller, Randall D. Imhoff, with aiding and abetting Dell's fraudulent accounting. The SEC alleges that, acting under his supervisor's general direction, Imhoff planned and implemented the use of Dell's "cookie jar" reserves. Imhoff has agreed to pay $25,000 in penalties as well as disgorgement and pre-judgment interest to settle the charges.
In addition to monetary penalties, both Davis and Imhoff have consented to the entry of an order that permanently restrains and enjoins them from further securities violations while not admitting or denying the SEC's allegations.
