The derivative suit, filed on behalf of the Brockton Contributory Retirement System, is seeking damages after Hurd’s sudden departure knocked 10 percent off its share prices, about $9 billion.
Hurd’s resignation was announced on 6 August, after evidence emerged that he had falsified as much as $20,000 of company funds in expense reports. The findings came to light during a sexual harassment investigation by former HP contractor Jodie Fisher, which failed to find any evidence to support the case.
HP shares have continued to drop in the week since the announcement, falling a further 1.55 percent yesterday to stand at $40.14 per share.
The lawsuit alleges that Hurd, CFO and interim CEO Cathie Lesjack, and others are guilty of insider trading and sold shares ahead of breaking the news.
Hurd is accused of selling millions of his HP stock ahead of the announcement, while Lesjack is said to have sold more than $265,000 of her shares.
The decision to grant Hurd an estimated $40 million severance package is also under fire, and the complaint wants several changes to HP policy, limiting the number of company executives on the board and ensuring the chair is independent.
The case was filed with the Superior Court of the State of California, County of Santa Clara, with the case number 1-10-cv-179356.
Lawrence Ellison, multibillionaire CEO of Oracle Corporation and close friend of Hurd, has also voiced heavy criticism of the board’s decision this week, saying it “failed to act in the best interest of HP’s employees, shareholders, customers and partners”.
In an email to the New York Times, Ellison said: “The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago.”