Last Friday a representative from Intel contacted us to dispute our recently published reports indicating the company has an undisclosed SEC investigation. In a follow-up conversation and email exchanges, this same Intel official claimed the company is not aware of any ongoing investigations from the SEC. As nothing was said or provided by Intel to suggest our work was in error, Intel remains on our Watch List as a company with a recently confirmed, undisclosed SEC investigation. History and our analysis appears below.
Facts of Interest or Concern:
On 04-Jun-2014 we published a Watch List Update in which we indicated Intel had a possible undisclosed SEC investigation which our research showed was undisclosed at the time we went into print. That report was based on a letter sent to us from the SEC dated 22-Apr-2014.
On 21-May-2014, we filed an administrative appeal with the SEC regarding our request for records on Intel. This is the highest level of confidence we can bring to our research and surpasses that done by those persons making occasional Freedom of Information Act requests.
In response to that appeal, on 25-Jun-2014, we received new information from the SEC confirming an on-going enforcement proceeding for Intel. Our research showed it continued to remain undisclosed. On 17-Jul-2014 we published a Watch List Update indicating the same.
Late in the day on Friday, 18-Jul-2014, we received an email message from Mr. Chris Kraeuter, which stated the following, "I'm on the Intel PR team. We’re not aware of any ongoing investigations from the SEC. I'm requesting you remove Intel from your page and Watch List update, etc., and/or provide me with additional information about the information you've received from the SEC."
We called Mr. Kraeuter back that same day and explained our basis for saying Intel has a confirmed, undisclosed SEC investigation. We shared our data and read from the 25-Jun-2014 appeal response we received from the SEC. We sent a copy to Mr. Kraeuter as well. We asked if there was an undisclosed SEC investigation and offered the company the opportunity to make a statement beyond that first denial sent by email and made over the phone with us. Mr. Kraeuter was clear in saying, more than once, they had no idea what this was about. He made no other statement when offered.
Our Take:
In time we will find out what was behind the SEC's responses to us concerning Intel. For now, we feel confident in the accuracy of our reporting as we confirmed Intel's investigative status through having filed an administrative appeal with the SEC. If we learn more from the SEC that would contradict this, we will prompty share it.
We would not be surprised if Intel has, or recently had, an SEC investigation which the company judged was not sufficiently material to warrant disclosure. Unfortunately, management gets to be the judge on this decision of whether an SEC probe needs to be disclosed, not investors. Though we asked, and were assured that was not the case, in the past we've seen ocassions where IR or PR personnel would not even be aware of their company's SEC exposures until senior management and their attorneys judged the matter needed to be disclosed.
If we later learn the company was lying to us in issuing its denials, the "it's not material" excuse will no longer matter as Intel's denials in the present day were both clear and strong.
