U.S. judge rejects HP settlement in Autonomy shareholder case
A Hewlett-Packard logo is seen at the company’s Executive Briefing Center in Palo Alto, California January 16, 2013.
Credit: Reuters/Stephen Lam
SAN FRANCISCO (Reuters) – A federal judge on Friday rejected Hewlett-Packard Co’s (HPQ.N) proposed settlement of shareholder litigation involving the information technology company’s botched acquisition of Autonomy Plc.
U.S. District Judge Charles Breyer in San Francisco wrote that the settlement may not have been fair for shareholders because it broadly released HP from liability for events unrelated to Autonomy.
“The shareholders appear to be relinquishing a whole universe of potential claims regarding HP governance and practices,” Breyer wrote.
Shareholder attorneys could not immediately be reached for comment.
“While HP is disappointed the Court did not approve the settlement as submitted, the Court recognized that a settlement releasing the HP directors and officers from Autonomy-related claims ‘represents a fair and reasonable resolution of the litigation,’” HP said in a statement. “HP remains committed to holding the architects of the Autonomy fraud accountable.”
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 earlier this year, shareholder attorneys agreed to drop all claims against HP‘s current and former executives, including Chief Executive Meg Whitman, board members and advisers to the company.
HP, in turn, agreed to some governance reforms. The company also said it would pursue claims against former Autonomy executives, including Chief Executive Michael Lynch.
The case is In re: Hewlett-Packard Co Shareholder Derivative Litigation, U.S. District Court, Northern District of California, No. 12-06003.
(Reporting by Dan Levine; Editing by Richard Chang and Leslie Adler)