The SEC confirmed yesterday that HP would not face sanctions over a failure to explain why director Thomas Perkins left during last year’s Dunn-director investigation saga.
“From the whole hubbub that erupted last summer, this is it” in terms of SEC enforcement, said Marc Fagel, associate regional director for the SEC in San Francisco. “We view the issue as a narrow one, which is, what is a company’s responsibility when a director resigns.”
It is unusual, in my experience, for a regulator to use the word “hubbub.” Sort of hard to press charges over hubbubs.
The SEC’s decision was explained thusly:
“It was a new rule and (HP) relied on their attorneys,” Fagel said. “They got legal advice from inside and outside counsel that they did not need to make the disclosure. You need to be careful how you sanction a company that relied on its counsel.”
“You need to be careful how you sanction a company that relied on its counsel.”
Ah, music to the ears of SEC partners everywhere. And a standard that regulators of various stripes should consider.
That said, will inside counsel make such a call in the future without an outside opinion? Are they covered (insurance, indemnity or otherwise) if they do and they are wrong?
While HP still faces related shareholder litigation, this is definitely a positive development for new HP GC Michael Holston.