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Congress questions HP exec

Demands explanation for $1.37m stock sale

Two US Congressmen have asked HP chief executive Mark Hurd to explain why he sold $1.37m of HP stock just before the company's spying scandal became public.

John Dingell and Mark Stupak, both Michigan Democrats, sent a letter to Hurd yesterday requesting an explanation and asking for a response by 21 December.

"We look forward to responding to the committee's inquiry," said HP spokeswoman Emma Wischhusen.

Both congressmen are ranking members of the investigations subcommittee of the House Energy and Commerce Committee, which in September held hearings on the HP pretexting scandal. In his testimony, Hurd apologised for the investigation HP undertook in which private investigators used false pretences, called pretexting, to gain access to the phone records of people being investigated to trace leaks of board deliberations to the media.

In their letter, Dingell and Stupak note that Hurd sold $1.37m in stock options on 25 August, the same day Hurd was briefed by lawyers for Wilson Sonsini, one of HP's outside law firms, about the pretexting investigation and possible legal liability for the company over it.

The scandal became public on 6 September when HP filed a notice with the US Securities and Exchange Commission acknowledging that director Thomas Perkins resigned over the way the leak investigation was conducted.

"The 25 August transaction does not appear to be part of any prescheduled programme," the congressmen wrote in their letter to Hurd. "Please explain the reason for this transaction."

Questions about the timing of HP executives' stock trades around the same time are also the subject of a shareholder lawsuit against the technology company. The suit, filed on 29 November in Santa Clara County Superior Court in California, accuses Hurd and seven other HP executives of selling a total of $41.3m worth of shares between 21 August and 6 September based on insider information that the pretexting scandal was about to become publicly known.

HP issued a statement at the time the lawsuit was filed calling it "baseless".

As it is, HP's stock price wasn't adversely affected by the scandal as investors regarded it as unrelated to the company's operations.


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