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HP could be facing its second controversy of 2006

Hewlett-Packard has already been facing a public relations nightmare after it hired a company which used pretexting -- the use of false or misleading statements to obtain personal information such as phone records -- to find the source of leaks to the media.  This time, the same group of shareholders who originally sued HP because of its connection with the pretexting spying scandal is now suing HP on claims that company executives, including current CEO Mark Hurd, made money from the scandal.      

Four HP board members and former HP general counsel Ann Baskins allegedly engaged in insider trading immediately prior to the public awareness of the pretexting drama.  Hurd, Baskins, Chief Financial Officer Bob Wayman and directors Lawrence Babbio and Lucille Salhany are accused of taking part in boardroom decisions to buy back HP shares to drive the stock price up, while they were also unloading shares of HP stock worth a total of $41.3 million two weeks before the leak investigation was unveiled.

HP has described the lawsuit as a "baseless lawsuit represents a transparent effort to exploit issues related to H-P's recent investigation for personal gain at the expense of H-P, its shareholders and its employees."

Although it was expected that HP's stock would be effected by the probe, the company's stock has remained relatively stable for the past several months.  In fact, the company's stock has risen after a report in November announced fourth-quarter profit and revenue that rose to $1.7 billion.




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