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HP Skates Away From SEC Charges

Zonk posted more than 7 years ago | from the that-is-some-good-lawyering-right-there dept.

HP 80

theodp writes "The SEC has dropping charges against HP, in return for some small concessions. The company was originally charged with improperly depriving investors of important information, violating the public reporting requirements of the Securities Exchange Act, and failing to disclose the full impact of an out-of-control press leak investigation. In return for the dropped charges, the computer maker simply agreed to cease and desist from doing similar acts in the future, without admitting or denying having done so in the past. 'HP acted in what it believed to be a proper manner,' said the company in a press release."

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80 comments

Did they have those shoes with built in skates? (-1, Offtopic)

Anonymous Coward | more than 7 years ago | (#19257359)

Because, man, those come in handy sometimes.

Re:Did they have those shoes with built in skates? (0)

Anonymous Coward | more than 7 years ago | (#19257393)

Never mind that. Do these editors speak English?

Re:Did they have those shoes with built in skates? (2, Insightful)

BosstonesOwn (794949) | more than 7 years ago | (#19257409)

No they skated away on the remanents of the grease they paid these guys to let them get off.

Why don't we hold corporate america to high standards any more ? This countries reputation is being bought and sold by these companies everyday.

Nothing like greasing the goons to let you go.

Re:Did they have those shoes with built in skates? (3, Insightful)

faloi (738831) | more than 7 years ago | (#19257619)

Why don't we hold corporate america to high standards any more ?

Any more? When did we ever?

Re:Did they have those shoes with built in skates? (2, Informative)

ronadams (987516) | more than 7 years ago | (#19257701)

No offense to the Parent, but why is it that 5982755979585 people post the obligatory outrage of corporate America posts, and not one of them reflects any actual knowledge of TFA? While it's an important issue, it doesn't really affect you or me that much...

Federal securities laws require a public company to disclose - by making a public filing with the Commission - the circumstances of the disagreement if a director resigns because of a disagreement with the company on any matter relating to its operations, policies or practices. Notwithstanding this requirement, HP did not make the mandated disclosures, instead reporting only the fact that Mr. Perkins had stepped down. The Commission found Mr. Perkins' disagreement related to HP's corporate governance and HP's policies regarding the handling of sensitive information, and therefore was a disagreement related to HP's operations, policies or practices which was required to be disclosed.
Sorry for quoting a whole paragraph; I know that's more than many /.'ers care to read from TFA. Relax, people. It's sunny today, and you don't have .0000001% of the insane red-tape restrictions on you a publicly traded company does.

Re:Did they have those shoes with built in skates? (1)

CantStopDancing (1036410) | more than 7 years ago | (#19257775)

you don't have .0000001% of the insane red-tape restrictions on you a publicly traded company does.
..and rightly so.

Re:Did they have those shoes with built in skates? (3, Interesting)

BosstonesOwn (794949) | more than 7 years ago | (#19257807)

Because they are a corporate entity they should follow all the rules.

What would happen if I failed to file my taxes ! I get in deep trouble and would probably be hung from the state building by the IRS workers , via Lord of the Fly like hordes , but yet these guys just feel like they shouldn't have to report even the little things.

As an Hp stock holder this affects me. This is a major reason why most americans are starting to see investing in US companies a waste. They are not being "nice neighbors" any more.

"It stinks And I don't like it" - Surly Truck Driver from Spiderman movie.

Re:Did they have those shoes with built in skates? (1)

eln (21727) | more than 7 years ago | (#19257821)

They withheld information that could have affected their stock price, and therefore their stockholders, in violation of federal law. They were allowed to escape punishment.

Sure, this particular incident doesn't affect me personally, but it is indicative of the general immunity that corporations seem to have from any consequences for their actions.

I wouldn't classify a regulation that requires a publicly traded company to reveal information that directly impacts their operations as "insane red-tape restrictions" either.

Re:Did they have those shoes with built in skates? (1)

ronadams (987516) | more than 7 years ago | (#19258321)

I did not intend to classify what HP did as excusable or good; my only point was that the FUDspread caused by people with an agenda against corporate America and an utter lack of knowledge is virulent and obnoxious. Yes, if you are a publicly traded company, you have an obligation to be honest about your dealings to your investors. Although, sometimes I pine for a true "caveat emptor" system when it comes to privately traded companies, if only because less bureaucratic, thousand page red tape parades exchanged for a system just like one used between two private parties (think: you buy from me on eBay and I send you an empty box) might make the whole process more simple and fair.

Re:Did they have those shoes with built in skates? (0)

spun (1352) | more than 7 years ago | (#19258479)

If corporate America had half the morals of a rabid weasel, we wouldn't bitch so much. We're just tired of being bent over a barrel and told that what were getting is really an internal colon massage.

Care to name what FUD you are talking about, or is it really that ANY bad-mouthing of our Corporate Masters sticks in your craw? Do you secretly long for a society in which no one is allowed to criticize the status quo? Do you profit from supporting the status quo?

Re:Did they have those shoes with built in skates? (2, Funny)

goldspider (445116) | more than 7 years ago | (#19258579)

"Do you profit from supporting the status quo?"

You really aught to put that in your sig. You add that snide personal attack to everything you post, it seems.

Re:Did they have those shoes with built in skates? (1)

spun (1352) | more than 7 years ago | (#19258975)

Fancy that, people who vehemently defend the status quo usually profit from it. How is asking someone to admit whether they profit from defending something a snide personal attack? You conservatives are such utter smirking hypocrites, you engage in personal attack all the time, and claim we are just being sensitive, or that you were just joking when we call you on it. But heaven forbid anyone should say something that offends you. Conservatives can dish it out, but they can't take it. I've read your site, it is neither brilliant nor common sense. It is a steaming pile of regurgitated sound bites and talking points with no original analysis whatsoever. You seem to have forgotten the most important point taught to you by your so-called savior, judge not lest ye be judged. You sir are a poor excuse for a Christian.

Re:Did they have those shoes with built in skates? (1)

Babbster (107076) | more than 7 years ago | (#19259299)

Fancy that, people who vehemently defend the status quo usually profit from it.

And people who vehemently attack the status quo are usually too stupid or lazy to do so themselves.

The status quo works for a lot of people who aren't super-rich. The fact that it doesn't work for you may be less an indication of how bad things are and more an indication of what a dolt you are.

Re:Did they have those shoes with built in skates? (1)

spun (1352) | more than 7 years ago | (#19259463)

What presumption. The status quo works perfectly well for me. I'm just not a weakling who needs every unfair advantage I can get. I did equally well for myself when I was abandoned in Greece at the age of sixteen as I do here in America as the white, male son of an upper-middle class family.

Of course the status quo works for a lot of people. That's why they never question its inherent unfairness. Usually, only people for whom it does not work would bother to question it. They aren't stupid or lazy, either. Me, I'm cursed with a highly developed sense of fairness, and taking unfair advantage causes me real pain, that's why I question it.

You could at least try to aim before taking a shot at me.

Re:Did they have those shoes with built in skates? (1)

Babbster (107076) | more than 7 years ago | (#19262381)

Or, I could laugh and walk away. I think I'll take that option.

Re:Did they have those shoes with built in skates? (0)

Anonymous Coward | more than 7 years ago | (#19262715)

That's always the smart options when someone makes you looks as bad as spun did you.

Re:Did they have those shoes with built in skates? (1)

goldspider (445116) | more than 7 years ago | (#19260569)

Wow, when did I bring my religious views into this? Are you simply painting everyone you perceive as "conservatives" with a very broad brush, and with paint made of assumptions and personal prejudices?

If you think you've offended me, you give yourself too much credit. I laugh at the fact that your supposed insight into me and my personal ideology is based on your own disdain and limited understanding of people with whom you disagree.

As for my site, that's just a hobby that I occasionally use to give words to my thoughts. I could care less if you disagree with me or not. And I bet that infuriates you too.

Re:Did they have those shoes with built in skates? (1)

spun (1352) | more than 7 years ago | (#19260833)

The very fact that you feel the need to assure me that I have not offended you says that I have hit the mark. You paint yourself as a conservative Christian on your own site, so either that is what you are, or you are a liar.

Re:Did they have those shoes with built in skates? (1)

goldspider (445116) | more than 7 years ago | (#19261263)

An example of how I've portrayed myself as a Christian on my site. Please.

And try to do it without equating my defense of Christians' rights to personally identifying with their beliefs. Indeed, defending free speech and opposing censorship is sooo neocon.

I'm curious how you've come to these conclusions of yours.

Re:Did they have those shoes with built in skates? (1)

spun (1352) | more than 7 years ago | (#19261569)

Hmm, maybe I jumped to conclusions. On closer examination, you seem to be defending their rights not identifying with their beliefs. I may be a humongous ass, but I'm an ass who can admit when he's made a mistake.

Re:Did they have those shoes with built in skates? (1)

Red Flayer (890720) | more than 7 years ago | (#19259031)

If corporate America had half the morals of a rabid weasel, we wouldn't bitch so much.
Oh, I don't know about that. Weasels are notoriously amoral, as everyone knows. So I'd have to guess from your statement that the rabidity of the weasel is what lends it morality in the first place.

As we all know, rabies is also known as hydrophobia, hence the moral value that can be ascribed to rabidity is a fear of water.

So what you are saying, in essence, is if corporate America was only half-afraid of water -- maybe timid, or even just-a-bit-cautious, around it -- we wouldn't bitch so much.

We're just tired of being bent over a barrel and told that what were getting is really an internal colon massage.
Now, now, that's a little harsh. So what if the bendor derives a lot of pleasure from the act -- if the bendee truly has his colon massaged and his prostate stimulated by the act, isn't that all that really matters to the bendee? Does it really make on whit of difference that the bendor (corporate America in your analogy) is busting a nut at the same time?

Sorry to take the piss, but the overblown metaphors are ridiculous. It's just a fact that organizations as large as HP have a built-in mechanism to deaccentuate morality (the bureaucracy serves to separate decision-makers from the negative effects of their decisions) -- never mind the fact that businesses have always been in business to make money, not to make people feel good (unless, of course, they make money from making people feel good). If you want executives at large companies to exercise morality in their decision-making, you'd have to confront them face-to-face with the impacts of their decisions, a la Michael Moore. Otherwise, you're just bitching about the problem to no avail.

Re:Did they have those shoes with built in skates? (1)

spun (1352) | more than 7 years ago | (#19259245)

Some times I'm just in a bad mood, and the only thing that helps lift my funk is trolling conservatives and libertarians on Slashdot. I know its wrong, I just can't help myself. I'm a victim of our amoral, liberal, free-to-be you-n-me society, what can I say?

Re:Did they have those shoes with built in skates? (1)

Red Flayer (890720) | more than 7 years ago | (#19263189)

Heh. I feel the same way sometimes... but it also backfires occasionally, when an exceptionally gifted countertroll takes over the thread.

Re:Did they have those shoes with built in skates? (1)

spun (1352) | more than 7 years ago | (#19269595)

If you can't stand the trolls, get outta the intertubes. That's my motto. About the best a troll can hope to get out of me is a few moments of seething rage, followed by a little chuckle and a salute.

Re:Did they have those shoes with built in skates? (2, Insightful)

asphaltjesus (978804) | more than 7 years ago | (#19257919)

Yes. that's part of being in the club. Recent high-profile club members that will get off include:

The major government IT vendors: http://it.slashdot.org/article.pl?sid=07/04/19/234 7237 [slashdot.org]

Jack Abramhoff and his pals: http://en.wikipedia.org/wiki/Jack_Abramoff [wikipedia.org] . A tiny number of people were perp-walked.

The Bush administration for, among other things, sodomizing the division that is used to exist between the Executive branch and the Attorneys General. http://slashdot.org/comments.pl?sid=234873&cid=191 46051 [slashdot.org] No consequences on this one.

American history is full of corporate shenanigans that ended with no penalties. Why does it suck now?

Re:Did they have those shoes with built in skates? (1)

bluprint (557000) | more than 7 years ago | (#19258411)

This countries reputation is being bought and sold by these companies everyday.

I'd like to point out that while power/influence/reputation may be bought by corporations every day, it is most certainly SOLD by your elected politicians. Instead of trying to hold a company to some ethical standard for which the very act of doing business often conflicts, we should instead remove from politicians the brokered power/influence/reputation of which being human often conflicts with being a good steward.

Obligatory: Editors... (1)

whisper_jeff (680366) | more than 7 years ago | (#19257437)

"The SEC has dropping charges against HP..."

Slashdot does have editors, right?

Right?

Re:Obligatory: Editors... (0)

Anonymous Coward | more than 7 years ago | (#19257467)

"What you say?"

it gets better (1)

game kid (805301) | more than 7 years ago | (#19257559)

The company was originally charged with improperly deprived investors of important information,
Nope, no editors, just blind posting.

Re:Obligatory: Editors... (2, Funny)

eviloverlordx (99809) | more than 7 years ago | (#19257711)

Slashdot does have editors, right?


You must be new here.

Re:Obligatory: Editors... (0)

Anonymous Coward | more than 7 years ago | (#19257767)

Another Zonk...

Re:Obligatory: Editors... (0)

Anonymous Coward | more than 7 years ago | (#19259033)

I is editorz.

Thems with the deepest pocketses winses! (2, Informative)

Chas (5144) | more than 7 years ago | (#19257441)

Yes my precious!

*** Beware. Disgust vent system engaged. ***

Change the charges (0, Offtopic)

ILuvRamen (1026668) | more than 7 years ago | (#19257463)

If I was the prosecutor, I'd charge them with selling crappy computers with tons of useless HP junk installed on it. Oh and also, a lesser charge of too many blue lights on one laptop.

yep (3, Insightful)

mastershake_phd (1050150) | more than 7 years ago | (#19257471)

Step 1: Become a Corporation. Step 2: Commit a crime. Step 3: Profit! Step 4: Dont go to jail. and maybe.. Step 5: Write a book about it. Step 6: Profit!

Re:yep (2, Insightful)

BosstonesOwn (794949) | more than 7 years ago | (#19257635)

Yeah only 1 problem, you forgot step 5b write a check for each one of the people you need to buy to make these "issues" go away.

Your forget Step 3.5 (1, Insightful)

Anonymous Coward | more than 7 years ago | (#19258433)

Step 3.5 use that profit to give congress some bribes, err I mean campaign contributions.

Has dropping charges? (1)

CowTipperGore (1081903) | more than 7 years ago | (#19257479)

The SEC has dropping charges against HP
Perhaps the submitter meant depth charges [wikipedia.org] , which were also known as dropping mines. Was this a Freudian Slip, linking HP, their stock, and a submarine? :)

no... (0)

Anonymous Coward | more than 7 years ago | (#19258569)

Was this a Freudian Slip

No. A "Freudian Slip" is when you say one thing and mean your mother.

Re:Has dropping charges? (0)

Anonymous Coward | more than 7 years ago | (#19259243)

Considering that HP's stock is trading near a point not seen since October 2000, I don't think there are any submarines involved.

Vote: Republican So +1, Inspirational (-1, Offtopic)

Anonymous Coward | more than 7 years ago | (#19257513)


So they can finish the Contract ON America [whitehouse.org] .

Patriotically,
Philboyd Studge

Disgusting... (4, Interesting)

packetmon (977047) | more than 7 years ago | (#19257543)

You know, it's disgusting how this country has become for a dollar....

Phillips, TRW, and Koch have more in common than a history of repeatedly violating workplace and environmental laws. They also rank among the nation's largest government contractors. Between 1995 and 2000, the three corporations received a combined total of $10.4 billion in federal business-at the same time that regulatory agencies and federal courts were citing the companies for jeopardizing the safety of their employees, polluting the nation's air and water, and even defrauding the government.

That's not supposed to happen. Federal contracting officers are charged with reviewing the record of companies that do business with the government and barring those that fail to demonstrate "a satisfactory record of integrity and business ethics." But officials are given no guidelines to follow in making such decisions, and there's no centralized system they can consult to inform them of corporate wrongdoing. As a result, a government report concluded in 2000, those responsible for awarding federal contracts are "extremely reluctant" to take action, even when they are aware of violations. And in the rare instances when the rule is enforced, it is almost always employed against small companies with little clout in Washington.


There is little incentive for any company to follow laws of the law. Why should they when they can get a slap on the wrist and a wink of the eye... "You don't go doing that again now you here... By the way, we really like those HP notebooks and I was thinking about my son's classmates". Jesus christ this country is a scam in itself

Re:Disgusting... (0)

Anonymous Coward | more than 7 years ago | (#19258457)

There is little incentive for any company to follow laws of the law.

Yep. As far back as the 60s, when I was in the Coast Guard, they'd send forty-foot boats out to track down oil slicks on San Francisco Bay. Often the searches went on as long as there was light. Then, after freezing your butt off, you got to spend a lot of the night writing up findings. Then the file would go to legal, which always found not enough evidence to charge anyone with.

So crews got around to just going below to sleep or play cards while the coxswain drove around he bay with maybe one other person on deck "looking for the source of a spill". It got to where, unless you could film oil actively flowing down the side of a ship and into the water, you'd never get a case into court.

This is not really a SEC cup of tea (1)

voislav98 (1004117) | more than 7 years ago | (#19260605)

What I really want to know is what is happening to the criminal charges, after all the offence commited was more in the domain of the police than the SEC.

Dropping Charges (1)

NeoTerra (986979) | more than 7 years ago | (#19257577)

Maybe they need to invest in some plastic bags to put those droppings in next time. Or I suppose they could flush it down the "tubes" where the rest of it is.

Re:Dropping Charges (0)

Anonymous Coward | more than 7 years ago | (#19258837)

Don't you think there is already too much dropping inside the series of tubes already?

better headline (2, Interesting)

einer (459199) | more than 7 years ago | (#19257599)

HP believes pretexting is "proper." HP believes that pretexting, something that if I were to do to HP would certainly NOT be considered "proper" is perfectly acceptable.

Keep in mind that it wasn't long ago that a bill legalizing pretexting was pushed by the RIAA [arstechnica.com] .

Please stop buying HP stuff. Please stop buying stuff from companies that have a political axe to grind against their consumers. Please stop buying stuff from companies that consider consumers a silent, renewable, god given, right to exploit resource that simply keeps buying their dreck regardless of their political behavior.

Start voting (because you haven't been at the polls). Boycott HP.

Re:better headline (4, Informative)

sjwaste (780063) | more than 7 years ago | (#19258205)

Moron. This settlement had nothing to do with pretexting. Read the SEC release before posting. Mods who bumped this to a 5, do a little bit of reading yourselves.

HP was charged with a '34 Act violation because they didn't report WHY a director (Perkins) resigned, only that he did. They were required to report WHY he resigned because he resigned over a disagreement with corporate policy, which must be disclosed per the '34 Act. He could've resigned because he disagreed with their pricing of toner, and it would've had to have been reported because:

Federal securities laws require a public company to disclose - by making a public filing with the Commission - the circumstances of the disagreement if a director resigns because of a disagreement with the company on any matter relating to its operations, policies or practices.

Yes, this happened in relation to the pretexting scandal, but that's not why the SEC sought enforcement. Therefore, HP's claims that it thought it was acting "lawfully" are not in regard to pretexting, but in regard to the disclosure of a director's resignation and what amounts to the quote above. They thought it didn't fit that definition, stupidly and blatantly incorrect, might I add, but it had nothing to do with them believing pretexting was a lawful action. That wasn't the question to be decided here.

don't buy from crooks (1)

swschrad (312009) | more than 7 years ago | (#19258793)

that's all you need to know.

In summary... (4, Funny)

RandoX (828285) | more than 7 years ago | (#19257671)

...Go ahead and break the law. We'll let you off if you promise not to do it again.

I hope they at least made them pinky-swear.

HP played their trump card (2)

RealProgrammer (723725) | more than 7 years ago | (#19258159)

HP said it was just a poor company from across the border, here to make profits Americans won't make.

The Feds decided it was too much hassle, made a speech, and let them go.

Re:In summary... (1)

TooMuchToDo (882796) | more than 7 years ago | (#19258935)

I hate to rain on your parade, but a large majority of criminal cases end this way (for low-level crimes). It's called "probation".

So, promise not to break the law... (3, Insightful)

surfingmarmot (858550) | more than 7 years ago | (#19257679)

...and escape all punishment for having knowingly and egregiously broken the law before the promise. From the SEC press release: "Without admitting or denying the Commission's findings, HP consented to an order that it cease and desist from committing or causing violations of these provisions." Oh, wait I get it! Knowing something is illegal and doing it anyway is not grounds for punishment as long as you, once cuaght, just promise to cease and desist violating the law thereafter. Defendant: "Gosh Your Honor. If, despite the prosecution's proving I broke the law and robbed a bank, I neither admit nor deny doing it and further I promise to cease and desist robbing banks in the future, can I just go free now?" Judge: "Certainly. I think you've learned your lesson. Defendant dimissed. Son you are free to go" Corporations and the rich are held to far lower standards than the rest of us.

Re:So, promise not to break the law... (1)

BosstonesOwn (794949) | more than 7 years ago | (#19257923)

"I swear your honor , I won't kill another person if you just let me off this one time. By the way your honor here's a $50 go buy yourself something nice."

Well off to Ameritrade to sell the rest of my HP stock.

 

Re:So, promise not to break the law... (2)

sjwaste (780063) | more than 7 years ago | (#19258061)

...and escape all punishment for having knowingly and egregiously broken the law before the promise. From the SEC press release: "Without admitting or denying the Commission's findings, HP consented to an order that it cease and desist from committing or causing violations of these provisions." Oh, wait I get it! Knowing something is illegal and doing it anyway is not grounds for punishment as long as you, once cuaght, just promise to cease and desist violating the law thereafter. Defendant: "Gosh Your Honor. If, despite the prosecution's proving I broke the law and robbed a bank, I neither admit nor deny doing it and further I promise to cease and desist robbing banks in the future, can I just go free now?" Judge: "Certainly. I think you've learned your lesson. Defendant dimissed. Son you are free to go" Corporations and the rich are held to far lower standards than the rest of us.

Do yourself a favor and think about this for a second before you go off spouting this nonsense.

A corporation isn't a living, breathing thing. But its shareholders are. If you impose economic sanctions on a corporation, that hurts the shareholders. You might be thinking "well, all these higher ups at HP are shareholders, so screw them!" But so are various individuals who had nothing to do with this behavior. You'd be devaluing the stock for everyone, including what is probably the majority: people who had nothing to do with the corporate action being sanctioned.

Your argument could've been for the personal liability of the persons involved, but it wasn't. You just wanted to penalize the corporation as a whole, which hurts a lot of innocent people. Stop and consider that next time.

Our securities laws are probably the toughest in the world, so much so that it's driving IPO's to other markets, because they protect investors pretty well. If your aim is to protect the investor, but in enforcing those rules, you sanction the corporation as a whole, devaluing the stock, how exactly did you protect that investor?

Re:So, promise not to break the law... (4, Insightful)

Crazy Man on Fire (153457) | more than 7 years ago | (#19258687)

Hurting innocent people, huh? Why shouldn't investors share responsibility for the actions of the corporations in which they invest? This is exactly the mindset that got us into this corporate ethics mess in the first place. If the shareholders aren't responsible, then who is? As a part owner of a corporation engaging in illegal activities, you aren't an innocent. If the stock value declines as a result of illegal activities of the corporation, stockholders deserve to lose money. Otherwise, there's no incentive for the corporations to behave responsibly and no incentive for investors to avoid corporations that engage in illegal/unethical practices.

Re:So, promise not to break the law... (1)

rhizome (115711) | more than 7 years ago | (#19259211)

Why shouldn't investors share responsibility for the actions of the corporations in which they invest?

Because any rules that hold down profit margins are effectively unconstitutional.

Re:So, promise not to break the law... (1)

ScrewMaster (602015) | more than 7 years ago | (#19261225)

Only if you believe that corporations are people with inalienable rights (they seem to think they are, but they are mistaken.) Besides, there are literally thousands of laws on the books that negatively affect profit margins. Environmental regulations for one. Sarbanes-Oxley for another. The list goes on and on and on, and part of why big manufacturers (and not so big ones) are moving manufacturing overseas is because other countries place lesser burdens on business.

Now, some of those laws are necessary, and others are gratuitous, but nevertheless there's nothing intrinsically unConstitutional about placing restrictions of one kind or another on large organizations

Re:So, promise not to break the law... (1)

sjwaste (780063) | more than 7 years ago | (#19271451)

Hurting innocent people, huh? Why shouldn't investors share responsibility for the actions of the corporations in which they invest? This is exactly the mindset that got us into this corporate ethics mess in the first place. If the shareholders aren't responsible, then who is? As a part owner of a corporation engaging in illegal activities, you aren't an innocent. If the stock value declines as a result of illegal activities of the corporation, stockholders deserve to lose money. Otherwise, there's no incentive for the corporations to behave responsibly and no incentive for investors to avoid corporations that engage in illegal/unethical practices.

Because minority investors don't really have a say in management decisions. Corporate shareholders elect the board, then the board appoints management. If, in the course of your retirement investing, you have a sector fund that includes HP in your 401(k), do you really believe you should take a hit because of a manager's wrongful actions? It's not like you KNEW they were going to break the law and chose to invest anyway. That's the difference between you, the un/semi-sophisticated investor, and an insider. An insider is making the decision, while you're largely unaware that they will act.

That's why, if the offense is great enough, you can pierce the corporate veil and get personal liability. Of course, in this instance, the offense was incomplete reporting (not saying why the director quit in the filing). Hardly a capital crime!

Oh, and if you want an incentive for a corporation not to engage in illegal practices, there are plenty besides hitting the corporation in the wallet. Namely, the SEC can bar you from ever serving as a director or officer of a public corporation again, if you've done something bad. That's a stronger incentive than fining the corporation, because an illegal action can potentially cost that individual his livelihood.

Fining the corporation is a good solution for ongoing, fairly obvious bad behavior. Say, if a company has been illegally dumping chemicals in the river and has gotten nailed a couple times for it. Yeah, fine the coporation then. They should pay to clean it up, and investors who didn't pull out deserve a stake in paying for the wrong committed because it was blatant and known to them. I'm not trying to tell you it's always a bad idea, I just think it's a bad idea in this instance and in similar situations where the offense was either minor or singular/isolated and not reasonably anticipated by the public.

Re:So, promise not to break the law... (0)

Anonymous Coward | more than 7 years ago | (#19258911)

so much so that it's driving IPO's to other markets

Nawww, couldn't possibly be that American investors wised up to IPO funds paid to companies with no clue how to make money were being used to buy Aerons and Lears and strippers and crack. It's gotta be those damn laws.

A corporation isn't a living, breathing thing.

No, but the people who give the orders are, and by ruling that "nothing bad happened", those living, breathing things are now protected from the consequences of those orders. Charging the company (and damaging the shareholders) opens up avenues for the people personally responsible for the problem to be held personally responsible by those damaged (thanks to our legal system's strong "no harm, no foul" spirit, causing more damage is pretty much the only way to fix damage).

Of course, all of this is overlooking the even more insidious issue: the government is working to position itself as the final arbiter of arbitrarily chosen truth. In this case, they're defining "the truth" to be that nothing wrong was done. In other cases, they've defined "the truth" to be whatever is most convenient at the time, whether it's Vioxx cases being canceled because the FDA declared that "the truth" is that Vioxx is perfectly safe, or things like this where the government simply declares that no law has been broken.

Re:So, promise not to break the law... (1)

sjwaste (780063) | more than 7 years ago | (#19271171)

Nawww, couldn't possibly be that American investors wised up to IPO funds paid to companies with no clue how to make money were being used to buy Aerons and Lears and strippers and crack. It's gotta be those damn laws.

Yeah, only American investors wised up, right? It's just a lot easier to issue securities in other markets. The SEC requires a lot of disclosure, both prior to issuance and ongoing, that other markets don't require. The SEC is not run by idiots, and they believe this to be a problem, so I'm going to go with them on that.

No, but the people who give the orders are, and by ruling that "nothing bad happened", those living, breathing things are now protected from the consequences of those orders. Charging the company (and damaging the shareholders) opens up avenues for the people personally responsible for the problem to be held personally responsible by those damaged (thanks to our legal system's strong "no harm, no foul" spirit, causing more damage is pretty much the only way to fix damage).

Look, the company failed to disclose the reason why a director quit. The issue here wasn't pretexting, as many posting in this thread seem to think. It was a disclosure violation. It's really not the most serious of errors. If it were, money damages against the corporation are an avenue, but if it's really that serious, there are circumstances where managers can be held personally liable. That's a lot less harmful to investors, if you really think something that bad happened.

to think about... (1)

ssintercept (843305) | more than 7 years ago | (#19260959)

corporations are a license to print money without any personal accountability. corporations have an ethic responsibility that has not been enforced....ever.

Re:So, promise not to break the law... (1)

bluprint (557000) | more than 7 years ago | (#19258065)

I think the point is, that they didn't knowingly break the law. In fact, they thought they were acting lawfully. It should at least be a mitigating factor, and considering the whole circumstance, the SEC's response seems appropriate.

From reading the two links, (IANAL and I haven't read the specific rule) it seems that this was a grey area for the rule. The rule is that if a board member quits because he disagrees with the companys operations/policies/practices, the company must explain the reason for the board member quitting. That makes sense, as it would help reveal cases where the company is operating in a way that stockholders might like to know about.

In this case, the board member didn't quit because of some operational disagreement, but rather he quit because HP didn't bring this to the accused board member's (a different board member) attention privately. It wasn't a difference about how the company operates, but rather a difference in how the company interacts with the board. Since "interaction with the board" isn't part of HP's ongoing operations, rather it's a legal "meta" type interaction, I can see where this could be excluded from the above rule, since the intent of the above rule is likely to expose when board members disagree with the operations of the business. (e.g. if the company has poor labor practices/policies, or the company is operating illegally, perhaps sweatshops, or unethically)

And apparently more than one lawyer thought the same thing, as HP was advised by both internal and external counsel to the same effect.

Cocksuckas (1)

Ranger (1783) | more than 7 years ago | (#19257761)

Time to feed HP to Wu's pigs. [wikipedia.org]

Message to America (1)

VorpalEdge (967279) | more than 7 years ago | (#19257893)

Hey, if you have money, feel free to break the law all you want, so long as you don't physically hurt someone. And if you do, I'm sure your prison sentence can get reduced for good behavior (ie. showing up to court on the correct date).

Seems like a small thing to me. (2, Insightful)

PHAEDRU5 (213667) | more than 7 years ago | (#19258147)

They had a leak. they investigated the leak. They presented findings to the board. One board member objected to the investigation and presentation process and resigned. They didn't disclose the full details of the resignation to the SEC.

It's not like they poisoned Bhopal, killed a bunch of pets, or murdered everyone in Hama.

Ohhhhhhh. I get it. Big company. Definitely deserving of all the flea bites the /. fanboy readership can inflict.

Re:Seems like a small thing to me. (1)

sjwaste (780063) | more than 7 years ago | (#19258267)

Finally, someone who actually read what the issue actually was. I'd mod you up but I've already replied to other posts.

This actually isn't a very serious offense. HP was probably a bit dumb in misinterpreting the regulation (or forgetting it existed), especially since securities laws tend to interpret broadly because of the overarching goal of investor protection, but it's not terrible.

Reading about the issue (1)

PHAEDRU5 (213667) | more than 7 years ago | (#19258643)

Thanks for the note.

One thing I've noticed about /. postings is that the headline text usually reflects the /. bias, rather than the actual facts of the article. It's sometimes quite startling to compare the reality of the article with the headline text. I mean different planet startling.

Re:Reading about the issue (0)

Anonymous Coward | more than 7 years ago | (#19260373)

So, pretexting is okay?

Startling, indeed.

Your meaning is unclear to me. (1)

PHAEDRU5 (213667) | more than 7 years ago | (#19263337)

I apologize for my cluelessness. Please explain.

Sounds familiar (1)

GodfatherofSoul (174979) | more than 7 years ago | (#19258213)

Microsoft's monopoly case was just as toothless. A relatively measly fine and promise to be good in the future. Exception, for corporate regulations to be effective, judgments have to be punitive and not regulatory. It simply takes too much of the state's resources and time to say "don't do it again." There's no deterrence when a CEO knows it'll be at least 4-5 years before a conviction (probably a wrist slap) comes down the pipe and that the state doesn't have the time or money to go after everyone. Hell, by then he'll be retired with a fat severance package from the fruits of his crime.

Agreed to no longer act properly (1)

codethreader (955402) | more than 7 years ago | (#19258295)

the computer maker simply agreed to cease and desist from doing similar acts in the future... 'HP acted in what it believed to be a proper manner,' said the company in a press release.
We did the right thing, but we promise we'll never do that again.

Skated? (1)

niceone (992278) | more than 7 years ago | (#19258343)

Jetted away for HP I think.

I wonder if there's more, in context (1)

artifex2004 (766107) | more than 7 years ago | (#19258349)

HP just won a US$5.6Bn contract with NASA [dailytech.com] , too.

NOT Shocked... AT ALL... (0)

Anonymous Coward | more than 7 years ago | (#19258361)

Is anyone else NOT shocked by this? It seems that if you're a big corporation and you are blatantly caught committing a felony, in the eyes of the new America, that's just fine. The only real criminals these days are regular people, not companies that steal, lie, and erode trust. Microsoft, Sony, HP, who else? It seems that these days if you are a popular and multi-billion dollar corporation you are free to interpret and obey the law whenever you so please or whenever you so displease. [If I had a huge THUMBS DOWN image, it would be attached right here.]

cease and desist (1)

Khashishi (775369) | more than 7 years ago | (#19258631)

How do you "cease" something that you don't admit to doing?

First the FCC and now the SEC. (2, Informative)

Irvu (248207) | more than 7 years ago | (#19259099)

I remember back in the 80's when people first noticed that the FCC was serving the interests of companies more than the populace. Everything else that has followed since from fighting for the rights of large media companies to merge to seeking to suppress internet content at the behest of AOL Time Warner started then with Regan's appointees. Now the FCC openly behaves as a tool of the conglomerates. Or in the case of the illegal wiretapping [wikipedia.org] , a tool of the NSA.

A similar lack of complaint was heard when the food and drug administration reevaluated aspertame for the third time and declared it safe despite their own warnings to the contrary see here [wikipedia.org] . Thanks again Donald Rumsfeld.

Then the Food and Drug administration recently was accused of stepping down enforcement of many complaints and 'streamlining' the process of approval for the drug companies.

Now this. Realistically speaking I would hope that sooner or later events like this, you know large companies committing fraud and spying on people for money, lying, etc. and being given only a slap on the wrist, would say piss people off so much that they would Write their Congressional Representative [house.gov] , and Their U.S. Senator [senate.gov] , and even The President [whitehouse.gov] . A few e-mails saying, either this is a government of by and for the people or we'll vote for someone else. A few e-mails saying, I pay my taxes why are they being spent to harm me? A few e-mails just reminding them that we are paying attention. Lacking that they can do whatever they want and we're no longer the greatest nation on earth.

(pluLs one Informative) (-1, Troll)

Anonymous Coward | more than 7 years ago | (#19262357)

fro8 within.

HP (1)

l0rd.47hl0n (1099499) | more than 7 years ago | (#19264527)

In other words, they paid off some people high up in the SEC. Great. Thank you very much.
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