HP Broke Federal Law In Probe, SEC Says

Hewlett-Packard broke federal laws when it didn't tell investors why a director abruptly resigned during a probe into boardroom leaks last year, the Securities and Exchange Commission said yesterday.

The SEC issued a cease-and-desist order against the world's largest maker of printers and personal computers, requiring that it refrain from violating disclosure laws, the regulator said in statement.

HP agreed to the measure, without admitting or denying wrongdoing, the SEC said. No other sanctions were imposed.

The company spied on directors, reporters and employees in an investigation into the source of news leaks. Investigators hired by HP obtained personal phone records in a practice that was deemed illegal by the state.

Venture capitalist Thomas Perkins, who eventually made the tactics public, resigned in May 2006 to protest Chairman Patricia C. Dunn's handling of the probe. In a statement a day later, Hewlett-Packard didn't say why he resigned. Chief executive Mark V. Hurd praised him in the release for "championing improvements that are leading to a stronger H-P."

The lack of disclosure broke securities laws requiring public companies to tell investors why a director left if it involves disagreements about operations, policies or practices, the SEC said.

"HP did not make the mandated disclosures, instead reporting only the fact that Mr. Perkins had stepped down," the regulator found.