Congress scrutinises Hurd's stock sale
- 12 December, 2006 22:00
Two US Congressmen have asked Hewlett-Packard chief executive officer, Mark Hurd, to explain why he sold US$1.37 million worth of HP stock just before the company's spying scandal became public.
Congressmen John Dingell and Mark Stupak, both Michigan Democrats, sent a letter to Hurd requesting an explanation and asking for a response by 21 December.
"We look forward to responding to the committee's inquiry," says HP spokeswoman Emma Wischhusen.
Both congressmen are ranking members of the investigations subcommittee of the House Energy and Commerce Committee, which in September held hearings on the HP pretexting scandal. In his testimony, Hurd apologised for the investigation HP undertook in which private investigators used false pretences, called pretexting, to gain access to the phone records of people being investigated to trace leaks of board deliberations to the media.
In their letter, Dingell and Stupak note that Hurd sold $1.37 million in stock options on 25 August, the same day Hurd was briefed by attorneys for Wilson Sonsini, one of HP's outside law firms, about the pretexting investigation and possible legal liability for the company over it.
"The August 25 transaction does not appear to be part of any prescheduled program," the congressmen wrote in the letter to Hurd. "Please explain the reason for this transaction."
Questions about the timing of HP executives' stock trades around the same time are also the subject of a shareholder lawsuit against the technology company. The suit, filed last month in California, accuses Hurd and seven other HP executives of selling a total $41.3 million worth of shares between 21 August and 6 September based on insider information that the pretexting scandal was about to become publicly known.
HP issued a statement at the time the lawsuit was filed calling it "baseless".
As it was, HP's stock price wasn't adversely affected by the scandal as investors regarded it as unrelated to the company's operations.