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IBM's announcement of SEC investigation leads to market value drop

October 28
10:34 PM 2015

IBM has just released news that the IT company is currently under investigation by the Securities and Exchange Commission on its accounting procedures in the US, Ireland, and Britain.

According to Reuters, IBM learned of SEC's investigation way back in August and is cooperating in however way they can.

Although it isn't currently known what deals were being investigated, IBM representative Edward Barbini did share with Reuters that the company's reporting process was "rigorous and disciplined."

Information about the investigation was disclosed by the tech giant in its quarterly filings which, according to Mr. Barbini, is not related to earlier investigations conducted by SEC on their cloud computing revenue.

In a report by NY Times, IBM's revenue has been experiencing a consistent drop for the last 14 quarters and has currently closed their stocks at $137.86, which is a decrease of about 4% compared to last quarter.

Belpointe analyst David Nelson said that news of the investigation "couldn't come at a worse possible time." IBM, although one of the world's most prominent tech companies, is facing a challenge with adjusting to the latest change in the market, and SEC's probing likely puts a strain on the tech company's efforts.

Another analyst, Toni Sacconaghi, shares with CRNthat he does expect the price drop to last for very long and that IBM has survived many investigations in the past which has never before resulted in "materially adverse resolution." He also added that if the investigation was anything serious, word would have broken out already and the price drop would have been much more severe.

IBM is not the only company facing inspections from SEC in the last month. Benzinga.com disclosed information that Google Inc. has also been probed by SEC. The information is reported to come from a source that has been tracking undisclosed investigations conducted with Google since 2013.

While companies like IBM have been considerate enough to tell investors that they're under SEC scrutiny, Google remains as one of the tech giants who refuses to announce such events, perhaps fearing a loss of faith from investors.

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