At a hearing on Monday in San Francisco, U.S. District Judge Charles
Breyer rejected several million dollars in fees that shareholder
attorneys would have recouped under the settlement. "That's out," he
In order to approve the remainder of the deal, Breyer said he would
have to make further inquiries into whether dismissing claims
against HP officers, including current Chief Executive Officer Meg
Whitman, was fair for shareholders.
HP announced a $8.8 billion writedown in November 2012, just over
one year after buying Autonomy, and linked more than $5 billion to
accounting fraud and inflated financials by Autonomy executives. The
British company and its executives have denied any wrongdoing.
Under the terms of the settlement reached in June, shareholder
attorneys agreed to drop all claims against HP's current and former
executives, including Whitman, board members and advisers to the
HP, in turn, agreed to team up with the shareholder attorneys to
bring claims against former Autonomy executives, including Chief
Executive Michael Lynch. The shareholder attorneys would have
recouped at least $18 million in fees.
In court on Monday, HP attorney Marc Wolinsky disclosed that HP also
intends to sue the British unit of Deloitte & Touche LLP [DLTE.UL]
over its role in auditing Autonomy Plc. In a statement, Deloitte
said any HP claim "would be utterly without merit and we will defend
ourselves strongly against it."
HP's allegations of accounting improprieties, misrepresentation and
disclosure failures at Autonomy have prompted an investigation by
the U.S. Securities and Exchange Commission and the Federal Bureau
of Investigation, as well as the UK's Serious Fraud Office.
Multiple parties objected to the shareholder settlement, including
former Autonomy Chief Financial Officer Sushovan Hussain. In court
on Monday, Hussain's attorney John Keker called the deal a
"whitewash" and asked that he be allowed to review internal HP
documents that absolve Whitman and others of wrongdoing.
[to top of second column]
"This is a joke," Keker said. "If it were a carcass, animals would
walk around it, it stinks so much."
Wolinsky said HP would vigorously contest Hussain's ability to
review documents. In a statement, HP said it will continue with its
bid to settle or dismiss the shareholder litigation.
Breyer scheduled another court hearing next month to decide how to
move forward, and whether Hussain and others would be allowed to
formally intervene in the case.
Regardless, Breyer said he would need to weigh the evidence against
HP officers as part of his analysis on whether the deal absolving
them of liability is fair for shareholders.
"Something went terribly wrong," Breyer said of the Autonomy
The case is In re: Hewlett-Packard Co Shareholder Derivative
Litigation, U.S. District Court, Northern District of California,
(This version of the story removes an extraneous word in paragraph
(Reporting by Dan Levine; Editing by Diane Craft, Jonathan Oatis and
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