The investigation concerns whether the company breached fiduciary duties by failing to provide sufficient disclosure to employees who were plan participants, imprudently managing the plan and through other self-dealing.
Shareholder lawsuits allege that the company made materially false and misleading statements to investors regarding its business and financial results from November 22, 2010, to August 18, 2011. During this time, the company reported growing revenues and income, and its stock price rose from $27 per share in March 2009 to almost $54 per share in April 2010. The lawsuits accuse the company of artificially causing this price rise, through false disclosures and other improper acts.
On August 18, 2011, Hewlett-Packard announced its third-quarter 2011 results and issued revised guidance. Hewlett-Packard also announced several major shifts in its long-term business model, including that it “will discontinue operations for webOS devices, specifically the TouchPad and webOS phones.” This announcement followed the president and chief executive’s resignation for violations of company policy, and HPQ’s stock price declined $1.88 per share, to close at $29.51 per share. This news led to shareholder derivative and fraud lawsuits filed against Hewlett-Packard.
Since the beginning of 2011 Hewlett-Packard’s stock price fell from more than $48 per share to recently less than $15, well below its 2009 low trading price. Hewlett-Packard employees who invested in company stock through the plan may have purchased at an artificially inflated price or otherwise been damaged.