Court rejects shareholder suit over HP scandal
Shareholders of the former Hewlett-Packard Co. can’t sue the Palo Alto technology company or its successor firms for securities fraud by former CEO Mark Hurd, who resigned over a 2010 scandal involving an actress that sent HP’s stock price plunging, a federal appeals court ruled Thursday.
The lead plaintiff in the proposed class-action suit, the retirement fund of Retail Wholesale & Department Store Union Local 338, said revelations of Hurd’s conduct and his resignation cost shareholders $10 billion.
HP then proclaimed a renewed commitment to ethical behavior, with Hurd writing in a preface to the company’s code of conduct that employees must “build trust in everything we do by living our values.”
In 2010, actress Jodie Fisher, who had worked for HP as an independent contractor introducing Hurd to new clients, accused Hurd of sexually harassing her, and also alleged that he had given her confidential information about an impending merger.
Arguing for the right to sue for securities fraud, the plaintiff’s lawyers said HP’s proclamations of its strong code of conduct had proven to be both false and “material” to its stock value.