A class action has been filed against HP after investors claim the firm violated federal securities law, following its acquisitions of Autonomy and EDS.
The case put forward at the Court for the Northern District of California in San Francisco said HP “concealed” the fact it had bought Autonomy. This was “based on financial statements that could not be relied upon,”. Additionally, it covered up “negative business trends” affecting the profits associated with its services business. Thus, incorporating the EDS asset.
The filing comes a week after HP wrote down the value of Autonomy by $8.8bn. Just one year after its $10.2bn purchase price was paid out. A statement from HP claimed former members of Autonomy’s management team had used “accounting improprieties, misrepresentations and disclosure failures” to inflate its figures. Thus, leading to a much higher selling price than the software firm was worth.
Response to Class Action Against HP
Mike Lynch, founder and former CEO of Autonomy, has denied the accusations. However, HP has forwarded its complaints to the UK’s Serious Fraud Office. Additionally they forwarded it to the US SEC for criminal and civil investigation.
HP was also forced to writedown the value of services firm EDS by $8bn this summer. It bought the firm in August 2008 for $13bn.
Investors believe HP traded on “artificially inflated prices” between 19 August 2011. Three days before it announced the EDS writedown – and 20 November 2012 – the day of the Autonomy writedown – and are claiming damages for all purchasers of HP stock in that time.
The only investor named so far on the filing is Allan J. Nicolow, but the defendants are named as HP, former CEO Leo Apotheker, current head of the company Meg Whitman, current CFO Cathie Lesjak and former chief accounting officer Jim Murrin.
Computer Weekly contacted HP for comment but a spokeswoman said the firm didn’t have an official statement at this time.
The deadline for investors to join the class action against HP is 25 January 2013. They are being represented by Robbins, Geller, Rudman and Dowd LLP.
