Congress looks into trading by HP CEO

Members of House investigation committee ask Hewlett-Packard's Mark Hurd to explain why he exercised options before spying tactics were disclosed to public.

By Grace Wong, staff writer

NEW YORK ( -- Lawmakers are looking into a stock option transaction Hewlett-Packard CEO Mark Hurd made amid an internal investigation into the company's controversial leak probe.

In a letter dated Dec. 12, Reps. John Dingell (D-Mich.) and Bart Stupak (D-Mich.) of the House Energy and Commerce Committee asked Hurd to explain why he cashed in $1.37 million worth of options on Aug. 25 - the same day outside lawyers were questioning Hurd about HP's board leak investigation.

Mark Hurd, Hewlett-Packard CEO

The questions come more than two months after Hurd and other HP officials testified before Congress about the company's spying case.

In addition to asking Hurd to confirm that he exercised options on that day, the letter asks him whether he had knowledge of potentially damaging company information when he cashed in the options.

At the time the options were exercised, HP hadn't yet disclosed to the public that its investigators obtained the phone records of board members and reporters in an effort to identify a company leak. It did not make disclosures of those questionable tactics until September.

"A key issue in the Subcommittee's investigation is how much Hewlett-Packard Co. (HP) management knew about the board-leak investigation, when they knew it, and what actions they took in response," said the letter signed by Dingell - the incoming chairman of the House Energy and Commerce Committee - and Stupak.

The inquiry comes amid growing awareness of widespread abuses related to executive stock options and just days after HP reached a $14.5 million civil settlement with California authorities over its spying case.

"This is not a new matter, and we look forward to responding to the committee's inquiry," a HP spokeswoman said about the letter.

In September, Hurd testified before Congress that he received a report detailing the methods HP's investigators used to spy on board members and journalists but that he never read it.

Investigators in the HP case impersonated board members and journalists to access their phone records, a practice known as "pretexting." The Senate recently passed legislation that makes such actions a crime.

HP has come under scrutiny for its poor corporate ethics, but its stock has held up well amid the fallout of spying scandal. Shares are trading at a six-year high, boosted by solid earnings resulting from aggressive cost-cutting efforts.

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