HP spying lawsuit expanded to include insider trading

Board members accused of selling shares before spying scandal was announced.


A shareholder lawsuit against HP for spying on board members and reporters has been expanded to include charges of insider stock trading.

An amended complaint has been filed in California accusing HP's chief exec Mark Hurd and seven other company executives of selling $41.3 million worth of HP stock at "inflated prices" shortly before the company revealed its investigators had used questionable and possibly illegal techniques to gain access to personal records such as phone call logs.

The eight executives sold 1.7 million shares of stock between 21 August and 6 September, according to the lawsuit. In a 31 August filing with the US Securities and Exchange Commission, HP said an outside investigator used the practice of pretexting, pretending to be someone else, to gain access to personal records.

Former HP Chairman Patricia Dunn and four others face criminal charges stemming from their alleged participation in the spying, which also used email tracer technology. HP also tried to prop up the value of its stock price by announcing on 21 August it would repurchase $6 billion worth of its stock, the lawsuit says.

"In the midst of this acrimony HP executives cashed in," says the complaint. HP issued a statement calling the lawsuit "baseless" and saying that it "represents a transparent effort to exploit issues related to HP's recent investigation for personal gain at the expense of HP, its shareholders and its employees," the statement said. "HP will defend itself vigorously."

HP acknowledged that it had obtained the phone records of 12 people by using pretexting.

The stockholder lawsuit, originally filed in September, asks the court to declare that HP's executives have "committed breaches of their fiduciary duties" and to order executives to repay the amount the company has been damaged by the spying scandal. The lawsuit also asks the court to require HP to reform its corporate governance and to extract punitive damages from Dunn, Hurd and other HP executives.

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