Hewlett-Packard Shareholders Accused of Insider Trading

Dennis Faas's picture

It seems that Hewlett-Packard's courtroom woes are far from over. The company's shareholders, who recently sued the company over the much discussed spying scandal, have amended the suit to include allegations of insider trading.

The original lawsuit claimed "breach of fiduciary responsibilities" by HP executives. It alleged that the executives' spy-like tactics to uncover boardroom leaks harmed the company. (Source: macnewsworld.com)

Now, the lawsuit -- which asks for an undisclosed amount -- also implicates HP Chief Executive Officer Mike Hurd, former General Counsel Ann Baskins, Chief Financial Officer Bob Wayman, Directors Lawrence Babbio and Lucille Salhany, and four board members. (Source: dailytech.com)

The suit claims that the group engaged in insider trading just before news of the spying incident became public. Specifically, the suit claims that they sold off $41.3 million worth of stock two weeks before the scandal broke. (Source: dailytech.com)

The lawsuit also alleges that the group approved stock buybacks in the months preceding the scandal in an effort "to keep the company's stock price propped up while insiders were selling." (Source: itnews.com)

HP has called the lawsuit "baseless." The company has issued a statement stating that the suit "represents a transparent effort to exploit issues related to HP's recent investigation for personal gain." The statement also vowed that "HP will defend itself vigorously." (Source: itnews.com)

Hewlett-Packard has somehow remained strong despite being plagued with scandal. Martin Reynolds, Vice President of industry analysis firm Gartner, believes that HP has come out from the boardroom drama unscathed.

"For the most part, the scandal has been a distraction and a nice media-friendly side show," he says. "It hasn't gotten to the point where it has become something that posed a risk to HP's strong and growing business." (Source: macnewsworld.com)

Still, the company cannot deny that 2006 has been a controversial year. Perhaps HP should consider starting off the new year with a few resolutions. A "no spying" oath may be a good place to start.

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