U.S. Securities and Exchange Commission (SEC) is investigating the departure of Mark Hurd as the chief Executive officer from Hewlett-Packard Co. (NYSE:HPQ) as part of its broad inquiry in to various claims, including insider trading by the former executive.
The SEC is probing whether Hurd passed information about HP's $13.9 billion takeover of Electronic Data Systems Corp. to a former HP event hostess in 2008, before the announcement of the deal, the Wall Street Journal reported citing people familiar with the matter.
Palo Alto-based HP confirmed the investigation by saying HP is co-operating fully with the SEC on its investigation. However, the technology giant declined to disclose what matters the SEC is investigating.
Meanwhile, the Journal said the agency is also looking at Hurd's use of corporate expenses in his dealings with the HP contractor, Jodie Fisher, whose accusation of sexual harassment led to Hurd's ouster as HP's CEO in August.
Though, HP's internal probe concluded that Hurd didn't violate the company's sexual-harassment policy, it does, however, found that Hurd used corporate funds to pay for meals and hotels for Fisher.
This could prove a point in favor of SEC as improper personal use of corporate money can lead to a case against an executive.
On the other hand, even if the EDS claim is proved, it is unlikely to result in a legal action against Hurd, unless Fisher found to be traded on the information or passed the same to someone else who had traded on it and made profits.
The latest SEC probe comes as the Palo Alto, California-based HP facing plethora of shareholder lawsuits over the $35 million exit package given by the company to Hurd. The exit package, however, was reduced after Hurd joined Oracle whose CEO Larry Ellison had openly criticized HP's board for sacking Hurd. Hurd joined Oracle as its co-president in September.
Hurd, who took the helm at HP in 2005, more than tripled HP's profit by adopting cost cutting measures and strengthening the company's core business of PCs and printers. During his tenure, HP shelled more than $20 billion in acquisitions, allowing it to diversify in to other areas like services, networking equipment and smartphones.
On Nov.1, HP named former Leo Apotheker as CEO. Apotheker was former Chief Executive of German business software maker SAP AG (SAP), the arch rival of Oracle.
HP's stock fell more than 10 percent through the end of August as investors feared that Hurd's successor would taste similar success at the company.
They closed Monday's regular trading session at $41.89. In the past 52-weeks, the stock has been trading in the range of $37.32 to $54.75.