Apparently IBM has stated that the Securities and Exchange Commission (SEC) is investigating the first quarter earnings report from 2005 - particularly in regard to expensing stock options. There’s not necessarly an implication of a violation of law - just an investigation at this point. The issue relates to the way employee stock options are reported - and the effect it has on the earnings reports.

Reuters: IBM says SEC probes earnings

SAN FRANCISCO (Reuters) - IBM said on Thursday that U.S. securities regulators were formally investigating the world’s biggest computer services company’s first-quarter earnings report and expensing of stock options.

The disclosure, which sent the company’s shares down as much as 1.3 percent, follows an informal investigation that International Business Machines Corp. revealed in June. The stepped-up investigation gives the U.S. Securities and Exchange Commission the power to subpoena documents, e-mails and individuals.

There has been some criticism in the investor community for how long this investigation has taken to launch - leading to uncertainty for investors.

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