Judge casts doubt over HP's Autonomy settlement

Under the terms of the settlement reached in June, shareholder attorneys agreed to drop all claims against HP's current and former executives, including Ms Whitman, board members and advisers to the company.

HP, in turn, agreed to team up with the shareholder attorneys to bring claims against former Autonomy executives, including former chief executive Michael Lynch. The shareholder attorneys would have recouped at least $18m in fees.

In court on Monday, HP attorney Marc Wolinsky disclosed that HP also intends to sue the British unit of Deloitte & Touche over its role in auditing Autonomy. In a statement, Deloitte said any HP claim "would be utterly without merit and we will defend ourselves strongly against it".

HP's allegations of accounting improprieties, misrepresentation and disclosure failures at Autonomy have prompted an investigation by the US Securities and Exchange Commission and the Federal Bureau of Investigation, as well as the UK's Serious Fraud Office.

Multiple parties objected to the shareholder settlement, including former Autonomy chief financial officer Sushovan Hussain. In court on Monday, Mr Hussain's attorney John Keker called the deal a "whitewash" and asked that he be allowed to review internal HP documents that absolve Whitman and others of wrongdoing.

"This is a joke," Mr Keker said. "If it were a carcass, animals would walk around it, it stinks so much."

Mr Wolinsky said HP would vigorously contest Mr Hussain's ability to review documents.

In a statement, HP said it will continue with its bid to settle or dismiss the shareholder litigation.

Judge Breyer scheduled another court hearing next month to decide how to move forward, and whether Mr Hussain and others would be allowed to formally intervene in the case.

Regardless, he said he would need to weigh the evidence against HP officers as part of his analysis on whether the deal absolving them of liability is fair for shareholders.

"Something went terribly wrong," Judge Breyer said of the Autonomy acquisition.

• The case is In re: Hewlett-Packard Co Shareholder Derivative Litigation, U.S. District Court, Northern District of California, No. 12-06003.

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