Ex-HP CEO cleared of fraud

Former HP CEO Mark Hurd left the company after a contractor accused him of sexual harassment. [Photograph by Reuters]

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Former HP CEO Mark Hurd has been cleared of allegations in a shareholder lawsuit that claimed he defrauded investors over the way he handled sexual harassment claims that led to his dismissal in 2010.

HP was also cleared in the lawsuit which challenged its public commitment to ethics.

The plaintiffs argued that Hurd should have been open about the potential ethical lapses that eventually led to his leaving HP. At the time, HP produced and later updated a document that outlined its ethical standards.

US district judge Jon Tigar found HP did not violate securities laws, despite making statements such as a commitment to be open, honest, and direct in all its dealings, and judged that these statements were too vague and general in nature.

According to Reuters, the judge said adoption of the plaintiff's argument would "render every code of ethics materially misleading whenever an executive commits an ethical violation following a scandal".

Hurd left the IT giant after contractor Jodie Fisher accused him of harassment. However, an internal HP investigation did not uncover any evidence of this, but found he had falsified expenses, some of them involving Fisher.

The plaintiffs claimed in their lawsuit that the share price had been fraudulently inflated because of Hurd's alleged dealings, and also claimed that Hurd had ignored his duty to disclose violations.

Tigar ruled that Hurd's alleged desire to keep his dealings with Fisher to himself, did not by itself give rise to a fraud claim.

"Nothing suggests that Hurd thought that he could mislead investors with the statements the court finds were immaterial," the judge wrote.

The findings will prevent shareholders led by a New York City union pension from pursuing fraud claims over Hurd's alleged violations of HP's standards of business conduct, the judge ruled.

At the time of the incident, Oracle CEO Larry Ellison said in an e-mail to the New York Times that HP's move was "the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago".

Described in many quarters as a hugely successful CEO, and credited with vastly improving HP's bottom line, Hurd's abrupt departure saw HP's shares fall almost 20%. At the time, HP's market value was over $100 billion, but has subsequently dropped by around half of that.

Ellison promptly snapped up Hurd, bringing him on board as co-president of Oracle, alongside CFO Safra Catz.