EMC And VMWare: Here's How Many Undisclosed SEC Filings Exist And How They Could Harm Investors

Probes Reporter has been consistently tracking undisclosed SEC investigative activity at EMC for three years now. Similar is the case for VMware, where the firm has seen undisclosed probes since November of 2013. Most recently, the analysts have been able to confirm that at least one undisclosed SEC probe of EMC is ongoing.

In the report mentioned above, the experts explained why they think deal talk actually creates higher incentives for EMC’s Chairman and CEO Joseph M. Tucci to not disclose SEC action.

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“Absent disclosure, investors are left to wonder if EMC and VMWare are involved in some sort of SEC probe(s) that could harm any potential transaction now, and/or come back to haunt investors later if a tracking stock or IPO is issued,” the research note expounded.

The Probes

Just a couple of months ago, the SEC confirmed that EMC is involved in “on-going enforcement proceedings that remain undisclosed.” However, this is not the first time this has happened. Back in April 2014, and again in May 2015, the commission had confirmed the company’s involvement in undisclosed enforcement proceedings.

Looking even further back, Probes Reporter found two more undisclosed SEC probes, which took place at EMC and were initiated in June 2011. One of them pertained to the use of private airplane provided for the primary use of Tucci.

Moreover, the SEC confirmed VMware was also involved in undisclosed, yet on-going enforcement proceedings.

The Firm’s Take

To sum up, Probes Reporter shared its take on the issue. “If you’re playing, or even watching the Dell talks, keep in mind that the SEC doesn’t stop an investigation just because a company restructured itself or engaged in a M&A deal,” the note explicated. “This means you absolutely must know where the SEC probes stand pre-deal and, more importantly, what entities they are likely to impact post-deal.”

But, how can the probes affect the deal or the future of the companies?

• 1. Dell could find out something about the probes that puts it off the deal or leads it to lower the valuation on the transaction.
• 2. Investors could inherit undisclosed SEC problems in either a tracking stock or potential IPO.

Furthermore, the firm noted that since the probes are not being discussed by investors, the risks implied are not yet discounted from the shares of either company.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

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