HP is being sued by shareholders who claim the company knowingly made misleading statements about its controversial Autonomy acquisition.
The lawsuit claims this led to HP’s stock price falling before the company publicly accused Autonomy of cooking the books and wrote-down $8.8bn of the deal, $5bn of which was due to alleged accounting improprieties.
The lawsuit, filed in a court in San Francisco, also claims HP’s chief accounting officer sold $1.1m of shares in Autonomy once the issues were known but before they became public.
According to the Telegraph, James Murrin has been accused of "failing in his duty" to shareholders by selling 40,000 shares in Autonomy without warning investors about the UK software company’s problems. The lawsuit alleges the transaction took place in February 2012, before HP was alerted to the alleged problems.
The suit also claims HP tried to extract itself from the deal once it became aware of the alleged problems, but did not make this information public at the time.
As well as targeting HP as a whole, Murrin, CEO Meg Whitman, CFO Catherine Lesjak and Leo Apotheker, CEO at the time of the deal, are also being pursued individually, the report claims.
The deal was first announced in August 2011, with HP paying $11.1bn for the UK firm. However just last week, the company made a stunning $8.8bn write-down of the deal. $5bn of that was related to accounting improprieties and misrepresentations. Essentially HP accused Autonomy management of falsifying its accounts to drive up its value ahead of an acquisition.
"Some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy’s acquisition by HP," the company said in a statement.
"These efforts appear to have been a wilful effort to mislead investors and potential buyers, and severely impacted HP management’s ability to fairly value Autonomy at the time of the deal," the statement added.
Mike Lynch, Autonomy founder and CEO at the time of the deal, denied the allegations. "HP has made a series of allegations against some unspecified former members of Autonomy Corporation PLC’s senior management team. The former management team of Autonomy was shocked to see this statement today, and flatly rejects these allegations, which are false."
"HP’s due diligence review was intensive, overseen on behalf of HP by KPMG, Barclays and Perella Weinberg. HP’s senior management has also been closely involved with running Autonomy for the past year," he said.