The Five Dumbest Things on Wall Street This Week

1. H-P's Spy Game

Privacy has been hard to come by lately at Hewlett-Packard (HPQ Quote - Cramer on HPQ - Stock Picks).

The Palo Alto, Calif., tech giant this week admitted that it spied on directors last year. A Wednesday regulatory filing says H-P hired investigators to ferret out news leaks as directors debated former CEO Carly Fiorina's firing.

This past spring, H-P's bloodhounds fingered director George Keyworth as the culprit. The board asked him to quit.

But H-P got more than it bargained for when Keyworth stuck around and his ally, venture capitalist Tom Perkins, quit instead. Perkins believed that he and nonexecutive chairman Patricia C. Dunn had agreed to handle the Keyworth flap privately. H-P didn't disclose the disagreement, claiming Perkins' beef was with Dunn, not the company.

Then things really got messy. H-P started hearing from regulators about the nondisclosure decision and about its investigative methods. At that point, the company conceded that its hired guns had assumed false identities to check directors' phone records without consent -- a technique known as "pretexting."

H-P ventures that "the use of pretexting at the time of the investigation was not generally unlawful," but admits that lawyers couldn't confirm the inquiry "complied in all respects with applicable law."

So now California's attorney general is investigating H-P's probe. Though he hasn't found any crimes so far, The Wall Street Journal reports that he calls the pretexting "colossally stupid."

H-P has its own view, of course.

"The situation is regrettable," Dunn told the Journal in a statement. "But the bottom line is that the board has asserted its commitment to upholding the standards of confidentiality that are critical to its functioning. A board can't serve effectively if there isn't complete trust that what gets discussed stays in the room."

Of course. Spying on people is always the best way to gain their trust.

Dumb-o-Meter score: 95. Back in 2000, the WSJ reported that Fiorina told employees that she saw Hewlett-Packard as "a winning e-company with a shining soul."

To view Colin Barr's video take on this article, click here.

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