Hewlett-Packard Co. said it has hired a former U.S. Securities and Exchange Commission general counsel and interviewed 25 people in a company investigation of alleged fraud at its Autonomy unit.
Ralph Ferrara, a partner at Proskauer Rose LLP and ex-general counsel at the SEC, is leading a probe by a three-member committee of independent directors investigating shareholder allegations that Hewlett-Packard ignored warnings about accounting irregularities and failed to vet its finances before acquiring the British software maker, the company’s lawyers said in filings yesterday in federal court in San Francisco.
Hewlett-Packard, the largest personal computer maker, faces shareholder lawsuits stemming from its Nov. 20 announcement that it was taking an $8.8 billion writedown on the value of Autonomy, which it agreed to buy for $10.3 billion in 2011. Hewlett-Packard alleges it was a victim of fraud and that Autonomy overstated its revenue, growth and prospects. Autonomy’s ex-chief executive officer, Michael Lynch, has denied HP’s claims and said the company botched the acquisition.
HP’s board committee has conducted preliminary interviews of 25 “key individuals” and reviewed documents, and its lawyers have retained accounting experts in the investigation, company lawyer Marc Wolinsky said in a filing requesting that the so-called derivative shareholder lawsuit be put on hold until Jan. 10.
HP directors Ralph Whitworth, Gary Reiner and Robert Bennett are members of the investigative committee, according to the filing.
Current and former HP and Autonomy employees in the U.S. and the U.K. are also expected to be interviewed, Wolinsky said. Putting the lawsuit on hold would give the committee time to complete its work and make a recommendation to the board about whether to file its own lawsuit. The investors in the lawsuit are suing HP and Autonomy executives on behalf of the company.
A stay is also justified to allow regulators to complete their investigations, Wolinsky said. The U.S. Justice Department, the SEC and the U.K. Serious Fraud Office have all opened investigations related to Autonomy, he said.
“These investigations may result in the commencement of civil or criminal proceedings against some of the witnesses or defendants in civil litigation currently pending in this court,” he said in the filing.
Michael Thacker, a spokesman for Palo Alto, California-based Hewlett-Packard, declined to comment on the filing.
The case is In Re Hewlett-Packard Co. Shareholder Derivative Litigation, 12-06003, U.S. District Court, Northern District of California (San Francisco).