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Stromberg: Dell helped T. Rowe settle buyout suit

T. Rowe Price CEO William Stromberg. (The Daily Record / Maximilian Franz)

T. Rowe Price CEO William Stromberg. (The Daily Record / Maximilian Franz)

T. Rowe Price CEO William Stromberg confirmed Tuesday that Dell Inc. paid the Baltimore firm about $25 million to settle a lawsuit over a 2013 proxy vote flub over the technology company’s buyout.

“Dell did pay,” said Stromberg. “Separate negotiations were made on behalf of clients.”

The Wall Street Journal reported the settlement last month, at that time, T. Rowe Price declined to comment on the deal or the accuracy of the article. Dell paid T. Rowe Price about $25 million to settle a lawsuit and in return, the Baltimore investment firm agreed to not appeal previous court rulings that could’ve resulted in a larger payday for the company.

T. Rowe Price announced in June that it would pay $194 million to reimburse clients affected by a proxy vote error related to the leveraged buyout of Dell in 2013.

The firm’s second-quarter results, released Tuesday, showed a noticeable hit from the Dell incident. The results included a one-time operating charge of $166.2 million as part of the firm’s compensation to clients. That charge decreased T. Rowe’s second-quarter net income by $100.7 million, or $0.39 in diluted earnings per common share.

T. Rowe has paid its clients and has recovered from the incident, said Stromberg.

“Our balance sheet remains very strong. I don’t think it has a lasting impact on the financial future of our company,” he said.

To prevent further errors, the company is going through an “error resolution examination process” and putting in safeguards. Stromberg recognized that while technology is a big part of the industry, there’s still work to be done.

“Technology plays a big role increasingly in most processes,” he said. “There are still parts of financial services that needs to go through that transformation.”

Since becoming CEO earlier this year, Stromberg has made technology investments a priority for T. Rowe. On Tuesday, Stromberg said the company is engaged in a multi-year effort to create a better digital experience for its clients through mobile apps and other technologies.

Stromberg also commented on the state of the global economy, describing it as slower than it has been in decades.

“I think the U.S. economy is chugging along in a relatively OK but relatively slow rate,” he said, adding that election years create a bit of uncertainty that markets dislike.

T. Rowe Price has about 300 people working in the United Kingdom and plans to keep that financial team after Britain voted to leave the European Union last month. The market effect from that vote will come once a separation agreement is finalized, but that’s still years in the making, said Stromberg.