The Board of the Government Employees Retirement System voted Thursday to pursue legal action against computer maker Hewlett Packard over allegations of an international accounting scandal said to cost the system $1.3 million.
Meeting at its St. Thomas offices, the GERS board agreed to take action over what investors quoted in media outlets around the world have called “serious accounting improprieties.” Details of the alleged $8.8 billion worldwide accounting scandal were explained by GERS general counsel Cathy Smith, who described in detail to the board accusations that came to light Nov. 20.
At issue is HP’s ownership of a software company called Autonomy Corporation. According to Smith, the U.S. Securities and Exchange Commission believes misrepresented stock values were posted prior to the company’s purchase by HP in 2011.
GERS would assume the role of lead plaintiff because it is the largest single investor.
The board also approved a motion to pursue securities litigation against Envivio Inc. in an action charging similar improprieties, leading to a GERS investment loss of $277,000.
Before the vote, Judge Edgar Ross, a member of the GERS Board of Trustees, noted that once legal action was entered into, GERS as a stockholder must hold the stocks throughout the entire litigation process. Both HP and Envivio stock values are dropping amid the ongoing SEC investigation, but GERS would not be able to divest until the action is settled.
In other action, the board approved a proposed $116 million budget for fiscal year 2013.
Trustees Ross, Carver Farrow, Leona Smith, Vincent Liger, Wilbur Callender and Chairman Raymond James attended Thursday’s meeting. Absent from the monthly meeting was trustee Desmond Maynard .
