WHAT IS PRETEXTING? California Attorney General Bill Lockyer's investigation concerns whether two laws were broken in Hewlett-Packard's effort to unmask board members suspected of leaking information to the news media. The laws concern "pretexting," a practice used to steal personal data, such as the phone numbers that an individual called, by obtaining it under the pretext of being that person. Pretexting also is used by identity thieves to trick companies into turning over a customer's Social Security or driver's license number or other personal data. In the HP case, the AT&T home phone records of at least one board member at the time, Tom Perkins, were breached through pretexting. (HP ultimately learned that another board member, George Keyworth, was the source of the leaks, HP says in a Securities and Exchange Commission filing.) The two California laws govern unauthorized use of data, and unauthorized use of personal identifying information. They are punishable by fines of up to $10,000 and three years in prison. HP hired a consulting firm to investigate board members; that company hired another firm to get information on   HP directors' calls.  HP says that it told the consulting firm to do its work legally, and that the firm promised to do so, the SEC filing says. HP learned later that pretexting was used, and that its legal advisers "could not confirm" that the techniques used fully complied with the law, the filing says. By Jim Hopkins

Dunn, 53, will quit the chairman's post at HP's previously scheduled board meeting Jan. 18, although she will remain a director. CEO Mark Hurd will become chairman.

PATRICIA DUNN : Another difficult chapter.

Keyworth is leaving because he got caught leaking confidential information to technology website CNET earlier this year. That leak and others prompted Dunn to hire a detective firm to find their source.

The firm, which HP is not naming, hired a subcontractor that used a controversial technique called "pretexting" to get the phone records of at least two board members and up to nine journalists. Pretexting is when someone contacts a phone company or other company pretending to be someone else, in order to get that person's confidential records.

"The invasion of my privacy and that of others was ill-conceived and inconsistant with HP's values," Keyworth said in a statement.

Dunn says she was unaware of the pretexting until after the fact, and HP has pledged not to do it any more.

Such techniques "have no place at HP," Hurd said in the statement. But the pretexting did find out what Dunn wanted to know. Keyworth was outed as the source of the leak at a board meeting in May and Dunn asked him to resign. At the time he refused, saying he was elected by shareholders.

Another board member, prominent venture capitalist Tom Perkins, became angry at the way Keyworth was treated and resigned in protest. After leaving, he began pushing HP for details on how Keyworth was identified. It was this investigation that widely revealed that detectives used Social Security numbers and other personal information to obtain Perkins' and others home phone records. Hurd apologied to Perkins Tuesday.

Keyworth continues to defend his actions. "The comments I made to the CNET reporter were, I believed, in the best interest of the company," he said in a statement Tuesday. But he said he was stepping down so HP could move past the controversy.

Tech and governance analysts say the boardroom shift is probably the best thing HP can do to quell the furor. "They made the best of a bad situation," says Charles Elson, a governance professor at the University of Delaware.

It's still unclear how much Dunn is to blame for the mess. Independent technology analyst Rob Enderle speculates that subordinates and contractors made many of the mistakes. But HP had little choice but to force her out, he says.

In the post-Enron era, "we have an environment that's very concerned about people in authority," he says.

Dunn's resignation won't quash the controversy completely. The FBI, the U.S. Attorney for Northern California, the House Energy and Commerce Committee, the Securities and Exchange Commission, and the California attorney general all have lauched probes of the case. Pretexting falls in a legal gray area, and there are concerns that what HP did is against the law.

Tuesday's annoucement came after two long board meetings Sunday and Monday. Although the scandal has dragged on in the public for more than a week, the board acted relatively quickly given the contentioiusness of the issues, says independent tech analyst Roger Kay.

That's a testament to Hurd's leadership, Kay says. Hurd, who has lead HP since April 2005, has been widely credited with turning around the computer giant.

It is problematic that Hurd will become both Chairman and CEO, Elson says. Predecessor Fiorina held both jobs, and that caused problems when she clashed with the board, especially over a controversial $25 billion acqusition of Compaq Computer. But the pretexting scandal probably made it impossible for HP to recruit an outside chairman, Elson says. "Their options weren't that good," he says.

Going forward, HP should strive to bring more independent directors onto the board to preserve the checks and balances important to a well-run company, Elson says. "They need to bring in some new blood," he says.

The news sent HP shares up 62 cents to $36.98 in mid-day trading.

Richard Hackborn, who has served on the board since 1992, will become lead independent director in January.

In a five-page letter Monday to Dunn, the House Energy and Commerce Committee said it was "troubled" by reports of pretexting.

The letter, signed by two Republicans and two Democrats, asks HP for the names of everyone involved and other data.

The FBI has begun a preliminary inquiry, agency spokeswoman LaRae Quy confirmed Monday. The agency's focus has not been determined, but it could include computer and wire fraud, she said.

The Justice Department has asked HP for information "similar to that sought" by California Attorney General Bill Lockyer, who has launched a criminal inquiry.

HP disclosed the department's interest Monday in a Securities and Exchange Commission filing.

The Federal Communications Commission sent a letter to AT&T on Thursday requesting information about phone records that HP may have obtained.

Contributing: Paul Davidson, Jim Hopkins, Kevin Johnson

Enlarge By Paul Sakuma, AP HP's Chairman Patricia Dunn, left, and CEO Mark Hurd at a press conference in March.