September 6, 2006 8:26 AM PDT

SEC filing acknowledges 'pretexting' in HP board probe

A controversial data-gathering technique known as "pretexting" was used in Hewlett-Packard's internal investigation of media leaks from its boardroom, the company disclosed Wednesday in a filing with the U.S. Securities and Exchange Commission.

In addition, the SEC filing noted that, in conjunction with the investigation, longtime director George Keyworth will not be nominated for another term on the HP board.

George Keyworth George Keyworth

As previously reported, HP Chairwoman Patricia Dunn launched an investigation into the company's board following leaks to the media, in particular a CNET article on an HP retreat to discuss the company's long-term strategies.

HP's handling of its investigation has spurred an informal investigation by the attorney general of California, but also prompted a letter from the staff of the SEC, according to the filing. State regulators are concerned about the use of pretexting and its legalities, while sources say the SEC is interested in the initial brief disclosure HP issued in announcing the departure of HP director Tom Perkins, who resigned in protest of the board investigation.

"We are investigating the HP situation for potential criminal violations. It's one of about a half-dozen significant (pretexting) cases we're investigating," said Nathan Barankin, a spokesman for the California attorney general's office. "We're in the fact-gathering stage, and it's early in the investigation."

The SEC and Keyworth declined to comment.

At a board meeting in May, Dunn presented the results of the investigation and revealed that Keyworth was the source of the leaks, which he acknowledged. Keyworth was asked by the board to resign at that meeting but refused, leading to a decision by the board in late August not to renominate him.

Related documents
Perkins: I was 'hacked'
Former HP director Tom Perkins lays out the issues he has with the board.

It was at that May meeting when Perkins resigned. He reiterated his earlier request of Dunn to just ask the board members if they had leaked information, rather than launch a full-blown investigation, and ask for a private apology, sources said.

A month later, according to the SEC filing, Perkins asked HP about the methods it used to conduct its investigation. (To see letters and e-mail to and from Perkins regarding these matters, including his charge that "my personal phone records were 'hacked'", click here.)

"Perkins sought information from HP concerning the methods used to conduct HP's investigations into the leaks, (asserting) that phone and e-mail communications had been improperly recorded as part of the investigation and that he had recently consulted with counsel regarding that assertion," according the SEC filing.

HP responded that "no recording or eavesdropping" had occurred but acknowledged pretexting had been used to gather information on phone records. Pretexting is a method used by individuals seeking to gain access to someone else's personal information, such as phone records, by pretending to be the legitimate holder of that account. These individuals sometimes feed the information to data brokers, who in turn sell individuals' private phone records to others.

HP, acting upon Perkins' request for more information on how the investigation was performed, asked its outside legal firm to conduct an investigation. The outside legal firm was not involved in the initial investigation into the leaks, according to the SEC filing. HP has long relied on Wilson Sonsini Goodrich & Rosati as its outside legal firm, with Larry Sonsini often present during board meetings, according to sources.

HP hired an outside private investigation firm, with "substantial experience" in internal investigations, according to the filing. "This firm had retained another party to obtain phone information concerning certain calls between HP directors and individuals outside of HP."

While Dunn and the internal HP team informed the private investigation firm to use techniques that were legal, the company later learned that the third party the private investigation firm hired had "in some cases employed pretexting," according to the SEC filing.

"The committee (assigned to review the investigation methodology) was then advised by the committee's outside counsel that the use of pretexting at the time of the investigation was not generally unlawful, except with respect to financial institutions, but such counsel could not confirm that the techniques employed by the outside consulting firm and the party retained by that firm complied with all respects with applicable law," according to the SEC filing.

HP's board of directors and its chief executive, Mark Hurd, have accepted the results of the committee's findings on the way in which the investigation was handled and have also agreed to "assure that all aspects of HP's investigations comply with applicable laws and HP's code of ethics," the SEC filing states.

See more CNET content tagged:
SEC filing, pretexting, investigation, leak, Patricia Dunn


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P.C. Dunn: Another Typical Facist from UC Berkley.
Another typical facist liberal. If you don't agree with her, she'll just use every ghestopo tactic to nail you. Personal privacy? What's that? I'm surprised she didn't go after the freedom of the press as well.

(To those who said liberals cannot be facist: amazing how whenever some private organization has a party or speech that the "non-facist" liberals disagrees with, these "non-facists" are always there to drown out free speech with "non-facists" noise and shouts. And don't forget those "non-facists" blockades of private property just because the attendees disagrees with these "non-facists".)
Posted by kamwmail-cnet1 (292 comments )
Reply Link Flag
erm .. what?
Not sure how making noise and blockading property is facist, as surely people of any political persuasion could used such tactics, facist and non-facist alike?
Posted by ContrastingSounds (6 comments )
Link Flag
As a shareholder, I want her off the board!
Now I have to submit proxy for her removal. Facist or not, this is the behavior of some repressive control-freak in a position of power and self-serving, rather than serving to the best interest of the shareholder and customer.
Posted by Below Meigh (249 comments )
Reply Link Flag
Just shows the ethics of the company...
Since Mark Hurd approved of her methods and has not asked for her resignation.
So the next time you think about buying HP wonder this: If they can do this to one of their own what will they do to (or for) me as just a consumer?
Think about that warranty guarantee, do they really mean it or did Patricia Dunn just approve the wording?
Posted by fred dunn (793 comments )
Reply Link Flag
Mark Hurd ??
Hurd works for her. Actually, he serves at the pleasure of the board, of which she is the chairperson.

Whether he apporves or not, asking your boss to resign is touchy.
Posted by regulator1956 (577 comments )
Link Flag
Oh well
Oh well, Gordon Gecko would be proud of Madam Chairpersons Patricia D.'s, underhanded and illicit boardroom tactics of spending corporate money to break California State and US Federal Laws!

I wonder, will she get accounting to claim the costs of the illegal investigation under legitimate business expenses, thus breaking the law again? Questions, Questions, and none will be answered at the annual shareholders meeting that's for sure!

Just goes to show, at times Hollywoods' version of fiction , is actually a mirror to real life situations at a future date!

Now Patricia D's tactics without ethics , will either be the toast of the Wall Street Sharks and bottom feeders, or it's pariah(a less likely event).

Strange times indeed!
Posted by heystoopid (691 comments )
Reply Link Flag
nothing wrong with HP's tactics
If HP received legal advice that this was acceptable practice, they did nothing wrong. It sounds like Mr. Perkins is acting like the guilty party. His suggestion of a private discussion and a personal apology for leaking the company's corporate strategy is absurd and should be belittled.

If HP's outside counsel erred in their advice, they should be the ones held responsible.
Posted by Sonicsands (43 comments )
Reply Link Flag
Counsel is not a crutch
I call ********. Using deceptive practices to delve into your colleague's personal records is unnecessary. It has achieved nothing, lost a respected board member, and is now an international cause for embarassment. If you were to both go to and then subsequently blame legal counsel for such a ill-conceived set of actions, you wouldn't deserve to hold such a responsible position.

Hewlett and Packard used to set the bar in setting corporate standards, not ask the lawyers what they could get away with.

Suggesting relyiance on counsel in such a manner frankly suggests someone who lacks personal standards of behaviour. Counsel is not a crutch, legal is not the same as ethical - an individual should be capable of realising when a behaviour is unethical without needing legal advice.
Posted by ContrastingSounds (6 comments )
Link Flag
interesting concept
Interesting concept, for how can a competent trained legal advisor, advise one that it is legal to break the assorted state and federal laws?

I think not!

The "Peter Principle" rocks!
Posted by heystoopid (691 comments )
Link Flag
Corporate confidentiality is equally important as personal privacy. HP infringed on the personal privacy of individuals only after their corporate privacy was breached.

There should be a balanced perspective on this issue. It is fair to question HP's tactics. But the directors who were leaking info should be equally reprimanded.
Posted by Sonicsands (43 comments )
Reply Link Flag
Dunn the NSA of HP
Patricia Dunn seems to be the NSA of the desktop world now <a class="jive-link-external" href="" target="_newWindow"></a> Privacy breaches like pretexting is tarnishing HP's shiny share of the market.

Ms. Dunn, how could you stoop so low?
Posted by marileev (292 comments )
Reply Link Flag
well done, Ms Dunn
This will send a strong message to all directors: Directorship is not a cushy job that allows you to eavesdrop on a company. You work for that company and must obey its rules
Posted by Sonicsands (43 comments )
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