SEC Mark Hurd Investigation Heats Up, Lessons Learned

Rob Enderle

Over a decade ago, a friend of mine was working as a headhunter and was thinking of going to work for a competitor. Her current employer, afraid that she was stealing confidential information to take to her new employer, had her arrested and we spent a long evening bailing her out of jail. That night, I learned a lot about the dangers of litigation and some of those memories came back to me as I saw the announcement this week that Mark Hurd was under investigation by the SEC for insider trading.


There is a good lesson here that I don't think we should lose.


My Night at the Jail


To continue the story: After we bailed out my friend, we hooked her up with a high-profile attorney and her employer had second thoughts. Ironically, not only was she not stealing information, she had previously decided not to leave her employer prior to her arrest. Her employer moved to drop the charges and discovered that it couldn't. In criminal complaints, the crime is against the state and, once started, has to take its course. The end result was that the firm eventually went out of business because it didn't anticipate the repercussions of its allegations.


Mark Hurd vs. Jodie Fisher


Since this Hurd/Fisher story has been covered in-depth for some time I'll just net it out here. Mark Hurd hired an attractive woman named Jodie Fisher to help him host executive events. She performed the role of hostess-a role that was typical of CEO wives back in the day-to keep the conversations flowing and the executives from feeling ignored. By all reports she did more than an adequate job and apparently she and Mark Hurd became close until he fired her. She alleged that she was fired because he wanted to take the wife metaphor to a more intimate conclusion. She refused to hire a very high-profile attorney to argue her case.


Her goal was to get a large settlement and part of what she alleged was that Hurd shared intimate details about corporate acquisitions that were privileged. Mark Hurd was subsequently fired from HP not because of the alleged almost-affair but because his handpicked board didn't believe his stories about what happened and were scared to death of an SEC investigation that could cost each of them their careers if discovered. Hurd then paid off Fisher, which ended the HP investigation, but didn't resolve the allegations. Given that HP has a history of leaks, the likelihood of the scandal being discovered was high, making the termination of Hurd largely unavoidable.


So while HP was stymied, the SEC was not and the very thing that HP was worried was going to happen apparently did this week. However, while the HP board is somewhat protected, Mark Hurd is not and now Oracle is potentially exposed.


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