India
Appeals Court Rules that HP Must Face a Lawsuit for Alleged Shareholder Fraud by Inflating Sales
Published
1 year agoon
Investors claim they learned about the alleged fraud only after HP was fined $6 million (roughly Rs. 49 crores) by the US SEC in September 2020 for its disclosures regarding its sales practises
On Tuesday, a US appeals court reinstated a claim that HP Inc. defrauded shareholders by secretly employing unprofitable strategies to increase sales of its printing supplies in 2015 and 2016.
The lawsuit was dismissed by a judge for being filed too late, but the 9th US Circuit Court of Appeals overturned that decision. Investors claim they learned about the alleged fraud only after HP was fined $6 million (roughly Rs. 49 crores) by the US Securities and Exchange Commission in September 2020 for its disclosures regarding its sales practises.
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Investors will benefit from the opinion, according to Darren Robbins, an attorney for the pension fund leading the case.
By definition, lies prevent investors from learning about corporate wrongdoing, he claimed.
Requests for comment from an HP spokesperson did not immediately receive a response.
In 2020, the SEC claimed that some regional managers for HP used incentives to speed up sales that they anticipated would occur in later quarters. Additionally, it claimed that sales managers “cannibalized” sales from regional distributors by selling heavily discounted supplies to distributors known to resell HP products outside of their own regions. This was against company policy.
The SEC claimed that HP failed to promptly inform investors of how these actions, which took place in 2015 and 2016, affected the technology company’s margins and increased inventories in Palo Alto, California.
The business did not agree or disagree with the SEC’s conclusions.
Following the SEC settlement, investors filed a lawsuit alleging that HP and its top executives had defrauded them by concealing the effects of the practises until 2016.
On June 21, 2016, HP announced a plan to reduce inventories in its distribution channels, estimating that this would result in a $450 million (roughly Rs. 36.9 lakhs) reduction in net revenue from supplies over the following two quarters. The following day, its stock price decreased by 5.4%.
In March 2022, US District Judge Jeffery White in Oakland, California, dismissed the case after ruling that investors had two years from the date the statements were made to file a lawsuit.
Circuit Judge Jay Bybee claimed that White had disregarded shareholders’ claims that the SEC settlement “put HP’s prior statements in a new context, revealing that ostensibly innocuous statements were actually intentional misrepresentations” in a letter to the San Francisco, California-based appeals court.
Credent TV Editorial Team
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