Under the agreement, IBM will admit no wrongdoing and will not face any fines or further disciplinary action.
In exchange, the company has agreed to a cease-and-desist order barring it from violating certain sections of the 1934 Securities Exchange Act.
The case stems from an analyst conference call in April 2005. The SEC claimed that IBM deliberately omitted information from its presentation by failing to disclose the expected impact of its decision to report employee stock options as an expense.
In doing so, the SEC said that IBM was able to lead analysts to predict a lower growth rate that the company would be able to meet.
"The facts here are particularly troubling because the disclosure decision was driven, in part, by management's perception of how the news would be interpreted by analysts," said Scott W Friestad, associate director of enforcement at the SEC, in a written statement.
IBM has specifically agreed to a cease-and-desist order forbidding it from violating sections 13a-11 and 12b-20 of the 1934 Securities Exchange Act, which forbids companies from withholding relevant information from financial reports.
The investigation only involved the reporting of the decision to expense the options. The SEC did not allege that IBM committed any misconduct with its dating of stock options.
The dating of stock options has landed companies such as Mercury Interactive, Apple and McAfee in hot water with the SEC.
IBM off the hook in SEC probe
By Shaun Nichols on Jun 7, 2007 10:47AM