Suit Filed Against HP Adds Insider Trading Accusations
By CIO Staff
A lawsuit filed Wednesday against PC giant Hewlett-Packard (HP) on behalf of its shareholders, over the corporate spying probe that led to criminal charges being handed down against the firm’s former chairwoman and ex-ethics chief, includes new insider trading accusations, the Associated Press reports via BusinessWeek.com.
HP CEO Mark Hurd
The suit charges HP executives, including Chief Executive Mark Hurd, with selling off millions of dollars’ worth of company stock in the weeks before the spying scandal made global news in an attempt to reduce the amount of money lost on resulting share value decreases, according to the AP.
The new legal action, filed in Santa Clara, Calif., Superior Court, adds to existing claims that HP executives failed to uphold their financial responsibilities and significantly hurt the firm, the AP reports. Hurd and seven more executives are accused of selling off $41.3 million worth of stock in the two weeks before the scandal went public—the company’s single busiest time period of stock sales in half a decade, according to the AP.
The new suit—which seeks unspecified damages—also joined together a number of additional related suits within the state of California, the AP reports.
The complaint claims that those accused “knew that the market’s perception of HP would be significantly damaged when (not if) the market became aware of the full extent of distrust and acrimony among Board members, the outlandish smear campaign tactics the acrimony had spurned, and the illegality of the investigatory tactics being utilized,” the AP reports.
The filing also says that HP started a $6 billion stock buyback in August to “prevent a free-fall” in its stock price once its controversial investigative methods became known to the public, according to the AP.
HP says the new suit is “baseless” and that it will “defend itself vigorously,” according to the AP.
The HP spying scandal broke because the company allegedly used unethical and deceptive investigative techniques in its efforts to determine the source of sensitive company information leaked to media outlets. The firm employed a practice called “pretexting,” in which investigators posed as company employees and journalists to obtain confidential phone records. Former HP Chairwoman Patricia Dunn and Kevin Hunsaker, the company’s former ethics chief, have both been charged in court for their roles in the scandal, according to the AP.