IBM hit with formal SEC probe

IBM is being formally investigated by the SEC for its first-quarter 2005 earnings and equity compensation expenses.

IBM disclosed Thursday that it is being formally investigated by the U.S. Securities and Exchange Commission (SEC) regarding its first-quarter 2005 earnings and equity compensation expenses. IBM previously disclosed in June 2005 that it has been cooperating informally with the SEC regarding the same matter.

During the quarter under investigation, IBM changed its accounting practices and began counting employee stock options as an expense, a move it made because of new SEC requirements at the time.

According to an IBM press statement, the SEC has informed the company that the investigation should not be viewed as evidence it engaged in any illegal activity.

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