Fox news reports today that the shareholder lawsuit regarding what can best be referred to as “the Hewlett Packard Fiasco†was amended yesterday to include claims of insider trading. It seems that at least eight HP executives, including incumbent CEO Mark Hurd, are alleged to have traded in HP securities in the two weeks prior to the announcement of Patricia Dunn’s spying/pretexting efforts.
It seems that this two week period was, according to the lawsuit, the busiest period of stock sales by HP execs. in five years. (It appears that most of the transactions involved were related to cashing out stock options.)
What is stunning to me is that HP is reported to have issued a statement saying that the lawsuit is baseless. Further, HP says that the lawsuit “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. HP will defend itself vigorously.â€
I am stunned that HP would have the chutzpah to issue a press release like that on such damning facts. If the facts are as alleged – in the two week period prior to revealing the pretexting fiasco, there was more HP stock activity by HP executives than in the past five years – and HP is offering no other rational explanation for the trading activity, I fail to see the sense in making a statement indicating that the eight trading executives engaged in transactions beyond scrutiny.
I am thinking back to the Martha Stewart case. I have never quite gotten over the district court opinion in that case, where the court dismissed the securities fraud case against Stewart for having proclaimed (in the face of damning evidence) that she was innocent of insider trading violations.
I imagine if I were the press person for HP, and I had an insider trading history that looked like this, I would either be quiet or be honest.