*NEWS*AN S.E.C. ENQUIERY FOR HP !
*NEWS*AN S.E.C. ENQUIERY FOR HP !
2005-06-14 at 11:03:00 am #11502
An SEC Query for HP
agency asked HP for a chronology of new CEO Mark Hurd’s job
negotiations and sales of NCR stock just before he left that company
The Securities & Exchange Commission has asked Hewlett-Packard for
information about the timing of stock trades made by Chief Executive
Mark Hurd shortly before he was hired on March 29. BusinessWeek Online
has learned that the SEC sent the computer maker a letter in April
requesting information about the trades and the timing of its
discussions with Hurd. HP provided the requested information, and the
SEC has not made any additional requests, says a source familiar with
ROUTINE MATTERS. The SEC inquiry relates to Hurd’s sale of NCR
while he was still CEO of that company, according to two sources with
knowledge of the matter. If Hurd knew he was a candidate for the top
job at HP at the time of the sales, the trades could constitute insider
trading on his part.
It is unclear if there is an ongoing probe by the SEC. Since the SEC
declined to comment, it is not known whether the agency is still
looking into the case, or whether it has closed its inquiry. The SEC
routinely sends out thousands of inquiries each year, but investigates
only a fraction of them. Companies that receive such inquiries from the
SEC are often stuck in limbo, as the SEC almost never notifies
companies if it has closed the books on a probe.
According to public records, between Mar. 1 and Mar. 3, Hurd sold
approximately 36,000 NCR shares at around $39 per share, earning $1.4
million. At the time, NCR’s stock was near an all-time high.
“NO QUESTION WHATSOEVER.” NCR stock fell 17% on the day HP
announced Hurd’s appointment. That followed a 3% drop the previous day
when BusinessWeek Online reported that his selection might be imminent.
Hurd was hired by HP to replace former CEO Carly Fiorina, who was fired
on Feb. 7.
HP spokesman Robert Sherbin says that Hurd did not learn he was a
candidate for the HP job until shortly after his final NCR stock sale
was processed on Mar. 3. “The shares were sold before any discussion
occurred with HP, and there’s no question whatsoever about the
propriety of the transactions,” says Sherbin.
HP has provided the SEC with information on Hurd’s trades, along with a
timeline of events that confirms his discussions with the company took
place after the trades, according to one source at HP with knowledge of
the SEC inquiry. Hurd decided to sell stock roughly a week before the
last trades on Mar. 3, but it took until that day for NCR to clear the
sale by its then-CEO, the source says.
QUICK TO ACTION. It’s not known whether Hurd, NCR, or Russell
Reynolds Associates, the executive search firm HP hired to find a new
CEO, also received inquiries from the SEC. Hurd, through an HP
spokesman, declined comment. NCR and Russell Reynolds also declined to
comment. NCR has said in earlier statements that it followed proper
procedures, and that there was nothing improper about the trades.
HP received the request for information soon after The Wall Street
Journal published an article on Apr. 6 regarding Hurd’s stock sales.
“The SEC is moving rather quickly these days to get a handle on
newsworthy events, so that scandals don’t get out ahead of them,” says
Georgetown University law professor Donald Langevoort. “It’s premature
to think there’s smoke, much less fire.”