Hewlett-Packard’s chief accounting officer sold $1.1m (£686,000) of shares in the computer giant after its $11.1bn deal for Autonomy (LSE: AU.L - news) started to unravel but before the problems were made public, it has been claimed.
In a potentially explosive lawsuit, shareholders in HP have accused James Murrin, who was a senior vice-president of the troubled Silicon Valley giant, of “fail[ing] in his duty” by selling 42,500 shares without warning investors about Autonomy’s problems.
He made the transaction in February, months before a whistleblower alerted HP to alleged problems with its books, but after Autonomy’s founder, Mike Lynch (AMEX: LGL - news) , had started to clash with his HP counterparts, sparking an exodus of crucial talent.
The company was also already looking to extricate itself from its acquisition of the Cambridge (BSE: CTE.BO - news) software firm amid concerns over its books, according to documents filed in a California court and seen by The Daily Telegraph.
The lawsuit will add further fuel to concerns amongst HP investors, who have already been severely rattled by events of the last week.
HP, which until recently ranked as the largest PC manufacturer in the world, wrote the value of its business down by $8.8bn last Tuesday accused Autonomy had used serious accounting improprieties to wilfully misrepresent the business.
By allegedly cooking its books, it inflated its price tag and persuaded HP to overpay for the business, which specialises in searching “unstructured data” such as texts, voicemails and video, the US giant claimed.
Shareholders in the US are suing HP as a whole but are also pursuing Mr Murrin and other board members personally. The directors, who also include chief executive Meg Whitman, chief financial officer Catherine Lesjak and the company’s former chief executive Leo Apotheker, “deceived the investing public,” it was claimed in the class-action lawsuit, led by shareholder Allan Nicolow.
“The defendents knew that the adverse facts…had not been disclosed to and were being concealed from the public and that the positive representations being made were then materially false and misleading,” the lawsuit claimed.
Their allegedly “fraudulent” behaviour allowed Mr Murrin “to sell HP stock at artificially inflated prices,” it added.
The lawsuit will add to the growing number of battles Ms Whitman is facing. Last week, Mr Lynch, who denies HP's claims, said he will summon the former eBay chief executive to the UK “to explain herself”, after she lodged her concerns over Autonomy with America’s Securities and Exchange Commission and the Serious Fraud Office.
He also turned on HP, saying that he knew as early as November (Xetra: A0Z24E - news) 2011 that Autonomy’s integration into the company was going awry. The US giant was plagued by “internecine wars” and deliberate attempts to undermine Autonomy, he added, decimating the company’s value.