logo
Plus   Neg
Share
Email

US Judge Rejects Settlement Deal Reached In HP's Derivative Lawsuits

A U.S. District Judge has on Monday slammed technology giant Hewlett-Packard Co.'s (HPQ) settlement reached in late June with attorneys representing its shareholders in derivative lawsuits related to its troubled $11.1 billion takeover of British software company Autonomy Corp. in 2011. The settlement deal is subject to court approval.

The Judge of U.S. District Court in San Francisco was apprehensive on the decision to dismiss claims against company officers as well as the provision for up to $48 million in fees that the attorneys would recoup for pursuing claims against ex-Autonomy executives.

A final decision on approving the settlement is expected to be made in the hearing slated for September 26, but the Judge is clear on not approving the proposed provision made for fees to the attorney's. HP would now have to re-write some parts of the settlement deal to gain final court approval for the settlement.

The settlement deal saw attorneys representing the shareholders agree to drop all claims against board members, advisers and current and former HP officials, including CEO Meg Whitman.

However, the deal will now see the attorneys assisting HP in pursuing unspecified claims against former Autonomy officials including Co-Founder and former CEO Michael Lynch and former CFO Sushovan Hussain, who has claimed the settlement to be "collusive and unfair."

The three lawsuits were filed against current and past HP directors, officers and advisors after HP announced in November 2012 that Autonomy had engaged in accounting improprieties, misrepresentations and disclosure failures prior to the deal in order to extract a better deal from HP.

The Autonomy deal was disastrous and led to HP incurring a hefty $8.8 billion writedown on the deal after about 18 months of the purchase. HP has linked more than $5 billion of the writedowns to accounting fraud and inflated financials by Autonomy executives.

Autonomy was charged of willfully inflating its financial statements, while HP was charged by shareholders of not scrutinizing Autonomy's financial statements properly.

The settlement deal reached on the three shareholder lawsuits, announced by Cotchett, Pitre & McCarthy, LLP, and Robbins Geller Rudman & Dowd LLP, is subject to court approval. The settlement was reached in a mediation conducted by retired U.S. District Judge Vaughn Walker.

Additionally, HP attorneys on Monday disclosed that the company also plans to sue the British arm of accounting giant Deloitte & Touche LLP over its role in auditing Autonomy's accounts.

HPQ closed Monday's regular trading session at $37.15, up $0.31 or 0.84% on a volume of 10.96 million shares.

For comments and feedback contact: editorial@rttnews.com

Business News

Editors Pick
Uber Technologies Inc. (UBER) Wednesday reported a first-quarter loss that narrowed from last year, despite revenues dropping 16%, reflecting a gain from sale of self-driving unit. The ride-hail service's fourth-quarter loss was narrower than Wall Street estimates, but revenues fell short of expectations.... Social media giant Facebook's Workplace business tool has breached the seven million paid subscribers mark at a time when jobs have gone remote and is now the new normal amid the ongoing pandemic. The number of paid subscribers has grown 40 percent from last year. General Motors Co. (GM) Wednesday reported a profit for the first-quarter that surged from last year, driven by strong price and mix performance in North America, strong credit and residual value performance at GM Financial, as well as the industry recovery in China. Earnings per share topped analysts' expectations, while quarterly revenues missed their estimates.
Follow RTT