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Judge Shields Securities Fraud Suit Against HP

SAN JOSE, Calif. (CN) - Hewlett-Packard and its CEO must face claims that they intentionally misled shareholders about the acquisition of a British firm, a federal judge ruled.

The securities fraud lawsuit against HP, CEO Meg Whitman and other executives alleges that they intentionally misled shareholders during the computer company's acquisition of Autonomy Corp., which resulted in the write-down of approximately $9 billion of HP's assets.

HP shareholders say the company had access to information concerning Autonomy's overvaluation and possible accounting improprieties prior to the acquisition but chose not to disclose the information to investors.

U.S. District Judge Charles Breyer dismissed investor claims against former HP chief Leo Apotheker, former Autonomy chief Mike Lynch and three other executives, saying the lawsuit failed to show any knowing or intentional misrepresentations.

Breyer also found, however, that statements Whitman made during an investor conference call regarding Autonomy's weak performance "omitted material information which the complaint alleges she possessed at the time, namely that she was considering accounting fraud at Autonomy."

Hewlett-Packard's quarterly earnings filing in September 2012, which said the fair value of Autonomy "approximated the carrying value," meanwhile was misleading because the company "knew there was a real possibility that HP had substantially overpaid for Autonomy," according to the ruling.

HP said last year that it had been the victim of a fraud following its $11 billion acquisition of Autonomy. The resulting write-down of Autonomy's purchase price by 85 percent led to significant declines in the value of HP's stock price.

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