SEC says HP broke rules on disclosure

Hewlett-Packard Co., the world’s largest printer and personal-computer maker, broke federal laws when it didn’t tell investors why a director abruptly resigned amid a probe into boardroom leaks last year, the Securities and Exchange Commission said Wednesday.

The SEC issued a cease-and-desist order against the company, requiring it to refrain from violating disclosure laws. HP agreed to the measure, without admitting or denying wrongdoing, the Washington-based agency said. No other sanctions were imposed.

The company spied on directors, reporters and employees in a probe authorized by then-Chairwoman Patricia C. Dunn to find the source of news leaks. Investigators hired by Palo Alto-based HP obtained personal phone records in a practice that was deemed illegal by the state.

Venture capitalist Thomas J. Perkins, who eventually made the tactics public, resigned in May 2006 to protest Dunn’s handling of the probe.

In a statement a day later, Hewlett-Packard didn’t say why he resigned. Chief Executive Mark V. Hurd praised him in the release for “championing improvements that are leading to a stronger HP.”

The lack of disclosure broke securities laws requiring public companies to tell investors why a director left if it involved disagreements about operations, policies or practices, the SEC said.

Hewlett-Packard’s leak investigation erupted into a scandal. For the first time in eight years, it dropped out of a top 10 ranking of U.S. companies noted for good corporate governance, diversity and fairness to employees, according to a survey of 1,100 companies by Business Ethics magazine.

The scandal also led the Federal Communications Commission to issue new rules requiring phone companies to give customers passwords to access their records.

Shares of Hewlett-Packard rose 5 cents to $45.63.