HP 2008 Annual Report Download - page 155

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 17: Litigation and Contingencies (Continued)
Leak Investigation Proceedings. As described below, HP is or has been the subject of various
governmental inquiries concerning the processes employed in an investigation into leaks of HP
confidential information to members of the media that concluded in May 2006:
• In August 2006, HP was informally contacted by the Attorney General of the State of California
requesting information concerning the processes employed in the leak investigation. On
December 7, 2006, HP announced that it entered into an agreement with the California
Attorney General to resolve civil claims arising from the leak investigation, including a claim
made by the California Attorney General in a Santa Clara County Superior Court action filed
on December 7, 2006, that HP committed unfair business practices under California law in
connection with the leak investigation. As a result of this agreement, which includes an
injunction, the California Attorney General will not pursue civil claims against HP or its current
and former directors, officers and employees. Under the terms of the agreement, HP paid a
total of $14.5 million and agreed to implement and maintain for five years a series of measures
designed to ensure that HP’s corporate investigations are conducted in accordance with
California law and the company’s high ethical standards. Of the $14.5 million, $13.5 million has
been used to create a Privacy and Piracy Fund to assist California prosecutors in investigating
and prosecuting consumer privacy and information piracy violations, $650,000 was used to pay
statutory damages and $350,000 reimbursed the California Attorney General’s office for its
investigation costs. There was no finding of liability against HP as part of the settlement.
• Beginning in September 2006, HP received requests from the Committee on Energy and
Commerce of the U.S. House of Representatives (the ‘‘Committee’’) for records and information
concerning the leak investigation, securities transactions by HP officers and directors, including
an August 25, 2006, securities transaction by Mark Hurd, HP’s Chairman and Chief Executive
Officer, and related matters. HP has responded to those requests. In addition, Mr. Hurd
voluntarily gave testimony to the Committee regarding the leak investigation on September 28,
2006.
• In September 2006, HP was informally contacted by the U.S. Attorney for the Northern District
of California requesting similar information concerning the processes employed in the leak
investigation. HP has responded to that request.
• Beginning in September 2006, HP has received requests from the Division of Enforcement of
the Securities and Exchange Commission for records and information and interviews with
current and former HP directors and officers relating to the leak investigation, the resignation of
Thomas J. Perkins from HP’s Board of Directors, HP’s May 22, 2006 and September 6, 2006
filings with the SEC on Form 8-K, stock repurchases by HP and securities transactions by its
officers and directors that occurred between May 1 and October 1, 2006, and HP’s policies,
practices and approval of securities transactions. In May 2007, HP consented to the entry of an
order by the SEC ordering HP to cease and desist from committing or causing violations of the
public reporting requirements of the Securities Exchange Act of 1934, as amended. HP has been
advised by the staff of the Division of Enforcement that the staff has completed its investigation
and does not intend to recommend that any other SEC enforcement action be brought in
connection with these matters.
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