IBM Says SEC May File Suit Over Accounting

IBM Corp. said federal regulators may take civil action against the company for possible violation of securities laws related to a customer’s accounting transaction.

The company said it had been issued a “Wells notice” by the Securities and Exchange Commission, which means it is likely that the SEC will file a civil suit. The notice relates to the SEC’s investigation of discount retailer Dollar General Corp., which is a customer of an IBM unit that sells electronic cash registers.

In the transaction in question, IBM paid Dollar General $11 million for certain used equipment as part of a sale of IBM replacement equipment in the retailer’s fourth fiscal quarter in 2000. IBM defended its accounting practices.

Shares of IBM rose 26 cents to $93.04 on the New York Stock Exchange before the news. In after-hours trading, IBM stock slipped to $92.65.