Five Years Later, Dell Still On the Hot Seat

How things have changed in the world during that time.

In 2005, when Dell told the world that the SEC had launched a probe into its financial reporting, the Round Rock, Texas-based company was still riding high as the world's No. 1 PC maker. At one point, Dell was so successful at undercutting competitors' pricing that it all but drove IBM out of the PC business. Dell created such a competitive industry that another giant, Compaq, waved the white flag and decided to sell its business to Hewlett-Packard.

And then the SEC investigation started and everything changed. Dell as a company became defensive. It launched its own investigation into its financial reporting and the conduct of some of its executives, found problems, and changed the way it did business. Kevin Rollins was forced out as CEO and Michael Dell retook that role. Dell ditched the company's direct-only model and started doing business with the channel. It entered new businesses like high-end storage and IT services. The company brought new blood into its executive ranks.

But the SEC investigation never went away. And now we are getting a possible reason why it's dragged out for so long.

The company issued a statement Thursday that said:

"Michael Dell, Chairman and CEO, and the SEC staff have recently commenced discussion of a settlement framework relating to Mr. Dell that would resolve allegations relating to the company’s disclosures and alleged omissions prior to Fiscal 2008 regarding certain aspects of the company’s commercial relationship with Intel Corp. Any such settlement by Mr. Dell would involve alleged violations of negligence-based fraud provisions of the federal securities laws, as well as other non-fraud based provisions, and would not include any bar against Mr. Dell’s service as an officer and director of a public company. Any settlement would be made without admitting or denying the SEC’s allegations."

Michael Dell created the company. He built it into a powerhouse. It's got his name and it's got his vision. And now we've learned that it's taken five years for him to create a "settlement framework" with the SEC that would specifically protect him from being prohibited from running a publicly traded company. Sam Nunn, the former U.S. senator and current Dell board member, also says Dell's independent directors "affirmed" that Michael Dell will stay on as chairman and CEO.

What Dell the company has just done is set the stage for this sad chapter in the company's history to finally close once and for all. But it's also set the stage for a fuller explanation from the SEC of what has gone on at the company -- both in the years before regulators started their investigation and in the five years since. Dell completed its own investigation into its accounting irregularities in 2007. Why didn't it just settle up with the SEC then?

Michael Dell has led an entire industry with his vision and aggressive business strategy, and forced executives throughout to change the way they do business. And once the behind-the-scenes story about what has gone on between Dell and the SEC for the past five years becomes public, that, too, may very lead executives throughout the industry to change the way they do business.