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HP Settles With SEC Over Boardroom Drama

Another loose end has been tied off in the pretexting boardroom drama that haunted computer giant HP the past year.

HP  on Wednesday announced it's reached a settlement with the Securities and Exchange Commission (SEC) related to the company's disclosure of Tom Perkins' resignation from its board of directors in May 2006.

HP said it agreed, without admitting or denying the SEC's findings, to the entry of a cease-and-desist order by the SEC. The SEC imposed no monetary or other penalty in connection with the settlement.

In the order, the SEC concludes that HP should not have limited its disclosure to just the fact that Perkins had resigned, as it had done, but also should have reported that he resigned because of a disagreement with the company's operations, policies or practices and provided a brief description of the circumstances around the disagreement.

As part of its investigation into press leaks of its boardroom proceedings, HP used private investigators who used pretexting to scrutinize the phone records of HP's board of directors and others, including several reporters.

Perkins resigned in protest after HP moved to dismiss another board member it identified as the source of the leaks. HP later reached a settlement with Perkins.

"HP acted in what it believed to be a proper manner," said Michael Holston, executive vice president and general counsel, HP, in a statement. "However, we understand and accept the SEC's views and are pleased to put this investigation behind us."

The order requires HP to cease and desist from committing or causing any violations of the public reporting requirements of the Securities Exchange Act of 1934.

In March, the state of California dropped felony charges against former HP chairman Patricia Dunn, a key player in the boardroom drama.