Hewlett-Packard Settles with SECBy Scott Ferguson | Posted 05-23-2007
Hewlett-Packard announced May 23 that it has agreed to a settlement with the Securities and Exchange Commission concerning its handling of Tom Perkins' resignation from its Board of Directors.
Under the agreement, the Palo Alto, Calif., company agreed to a cease-and-desist order by the SEC in regards to the federal investigation of Perkins' resignation from the board in 2006.
In the SEC order, the federal agency found that HP should not have limited its disclosure to the fact that Perkins had resigned, as it did, but also should have reported that he resigned because of a disagreement with its practices and the company should have "provided a brief description of the circumstances around the disagreement."
It was Perkins' resignation from HP's board in May 2006 that led to the disclosure that the company had engaged in a spying operation against other board members and reporters. Perkins, who claims to have disagreed with the board about how the investigation was handled, later requested an investigation of the tactics used in the investigation.
The resulting investigation of Perkins' claim by HP brought the company's use of pretextinga process of obtaining an individual's personal data such as phone records by pretending to be that personto light and prompted the Sept. 6, 2006 SEC filing, which led to the public disclosure of the company's tactics.
The scandal eventually led to the California Attorney General's Office charging former Board Chairman Patricia Dunn and four other people with fraudulent wire communications and several other criminal counts.
On May 14, Dunn and several others involved settled with California prosecutors, although the federal authorities have yet to determine if they will pursue a case.
In a statement, HP executives said they believe Perkins' resignation was handled properly.
"HP acted in what it believed to be a proper manner," said Michael Holston, HP's executive vice president and general counsel. "However, we understand and accept the SEC's views and are pleased to put this investigation behind us."
The agreement also means that the SEC will not fine Hewlett-Packard.
"The company viewed this as a personal dispute between a director and the chairman and opted to stay silent about the disagreement," Marc Fagel, the associate regional director of the SEC's San Francisco Office, said in a statement.
"But the failure to make the required disclosures deprived investors of important information about the management of the company by its Board of Directors."
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