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ISS, HP relationship questioned

ISS, HP relationship questioned

An investment adviser has accused Hewlett-Packard of misleading shareholders by failing to disclose its business relationship with a major financial backer of Institutional Shareholder Services Inc. ISS is an influential institutional investor advisory firm that supported HP's merger with Compaq Computer Corp.

In a major boost for the merger prospects, recommended early last month that its members vote in favor of the HP/Compaq deal. Results of the March 19 vote on the merger have not yet been tabulated, although HP has already claimed victory.

New York-based venture capital firm Warburg Pincus, which has been involved in business deals with HP, put up US$26.1 million to underwrite the ISS purchase by New York-based proxy voting services firm Proxy Monitor. According to SocialFunds.com, Proxy Monitor paid $45 million for ISS, buying it from Thomson Financial in New York. SocialFunds.com is the Web site of SRI World Group. It offers coverage of social mutual funds, community investing, shareowner action and daily social investment news.

In an SEC filing, Warburg is listed as being a general partner in ISS. And three of Warburg Pincus' partners, Mark Colodny, Pat Hackett and Sidney Lapidus, sit on the eight-member ISS board of directors, according to SEC filings.

Warburg and HP are both investors in several ventures.


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