Probe of IBM’s Options Made Formal

Federal investigators have ratcheted up their probe of how IBM Corp. advised Wall Street about stock option expenses in the first quarter of 2005, the technology giant disclosed Thursday.

The Securities and Exchange Commission opened an informal investigation of the matter last June, but Armonk, N.Y.-based IBM said the agency had informed the company Wednesday that the probe is now formal.

That means the SEC can issue subpoenas for documents rather than just requesting them. The step often occurs in the course of an agency investigation.

The investigation surrounds the guidance that IBM gave before its first-quarter earnings, which were released April 14.

IBM spokesman Ed Barbini said IBM was cooperating with the SEC, and noted that the agency has informed the company that the investigation should not be construed as an indication that the law was broken.