HP says investor suit is baseless

Hewlett-Packard Co. said Thursday that a shareholder suit accusing its chief executive and several directors of insider trading related to its boardroom leak probe was baseless.

The lawsuit, filed Wednesday in state court in San Jose, “represents a transparent effort to exploit issues related to HP’s recent investigation for personal gain,” the Palo Alto-based computer and printer maker said in a statement. “HP will defend itself vigorously.”

The suit alleges that Chief Executive Mark V. Hurd and other directors and senior executives sold about $41.3 million of HP stock in the 2 1/2 weeks preceding HP’s disclosure that investigators working on its behalf used false pretenses to obtain directors’ and journalists’ private phone records.

HP’s board was attempting to track down the source of media leaks dating to at least 2005.

Instead of falling, the stock rose to a 52-week high after the leak investigation disclosure as investors focused on the company’s resurgence under Hurd, who took over from former CEO Carly Fiorina in 2005.

The lawsuit, however, alleges the board approved stock buybacks totaling $10 billion in the months leading up to the scandal “to keep the company’s stock price propped up while insiders were selling.” The board knew its leak investigation was likely to be made public when it approved a $6-billion repurchase Aug. 21, the suit alleges.

Former HP Chairwoman Patricia C. Dunn resigned after the investigation became public. Dunn, former HP in-house lawyer Kevin T. Hunsaker and three private investigators have pleaded not guilty to state charges stemming from the incident.

Dunn’s lawyer said the insider-trading accusations “have nothing to do” with his client.