pay-out helps T. Rowe compensate fund investors
T. Rowe Price Group
won't have to dip quite as far into its cash reserves to pay out
investors affected by the Baltimore investment firm's embarassing
misstep in Dell's 2013 buyout after settling with the computer giant
earlier this week.
T. Rowe had opposed
the proposed $25 billion Dell buyout for undervaluing the company, but
accidentally voted for the deal. The mistake cost the company the
ability to join other investors in suing for a higher price and cost
its fund investors about $200 million, the amount they would have been
eligible to collect through the lawsuit.
Earlier this month
T. Rowe said it would pay $194 million into funds that had held the
firm's 31 million shares of Dell stock by taking a one-time charge in
the second quarter of its 2016 fiscal year.
In documents filed
Friday with the
U.S. Securities and Exchange Commission,
T. Rowe reported it was lowering the amount of its one-time charge to
$166 million, after reaching a separate settlement with Dell.
T. Rowe expects the
pay-out to reduce net income, after tax, by $100 million, or 39 cents
T. Rowe confirmed
Wednesday it had settled with Dell over the buyout, but would not say
how much the deal was worth. The regulatory filing indicates Dell paid
A Delaware judge
ruled in May that Dell founder Michael Dell had underpaid by about $6
billion, but said that because T. Rowe had voted for the deal, though
unintentionally, the firm could not collect on the ruling.
The automated system
that instructs T. Rowe shareholders how to vote defaults to a "yes"
vote. The firm meant to manually change the vote instruction to "no"
for the Dell vote, but because of an administrative mix-up, did not.
T. Rowe shares were
down 27 cents at $72.70 each in late morning trading.
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