HP and boss Whitman to defend class action rule over Autonomy
Wednesday 27 November 2013
Hewlett Packard and chief executive officer Meg Whitman will have to defend a class-action lawsuit over fraud allegations involving its British subsidiary, Autonomy, a US court has ruled.
Whitman first announced in Novemeber 2012 that she was investigating allegations of fraud after the 2010 acquisition of Automony but HP shareholders allege she knew about the claims earlier that year.
Her statements in May and June 2012 “omitted material information which the complaint alleges she possessed at the time, namely that she was considering accounting fraud at Autonomy” as the explanation for its weak performance, US District Judge Charles Breyer said. The judge also found that HP’s quarterly results in September 2012, which said the fair value of Autonomy “approximated the carrying value”, was misleading because the company “knew there was a real possibility that HP had substantially overpaid for Autonomy”.
HP, which denies wrongdoing, did not offer immediate comment.
Autonomy’s British founder and ex-chief executive, Mike Lynch, and ex-HP boss Leo Apotheker will not face legal action as Breyer said the class-action lawsuit failed to show they intentionally misled shareholders. HP bought Autonomy, then a FTSE 100 company, for $11 billion (£6.7 billion) in 2010 but took an $8.8 billion hit last November because Autonomy had allegedly overstated its revenue growth and prospects.
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