US District Judge Charles Breyer has turned down HP's plan to pay $48m to lawyers of its investors' to help take legal action against ex-Autonomy executives.
The judge noted that such terms must not form part of a pact aimed at protecting the company's management from allegations over an $8.8bn loss linked to the acquisition of Autonomy.
In a bid to support other part of the deal, Breyer noted that further probe needed whether rejecting claims against HP officers, including existing CEO Meg Whitman, was practical for investors.
Objecting the shareholder settlement, John Keker, attorney of Autonomy's ex-CFO Sushovan Hussain claimed the deal as a 'whitewash' and sought to allow reviewing internal HP documents that clear Whitman and others of unlawful activity.
Earlier this month, HP alleged the Hussain as 'one of the chief architects of the massive fraud' that led the company's own shareholders to sue the tech major over Autonomy acquisition.
In response to HP's fraud accusations, Hussain alleged that that the company is using claims as a way to mask its own mismanaged deals.
HP's $11.1bn deal for British firm Autonomy in 2011 triggered debate and even prompted government probes when HP wrote off $8.8bn of the purchase price the following year, over allegedly discovery of severe accounting fraud in Autonomy's books.
As per the terms of the settlement reached in June, shareholder attorneys agreed to withdraw all claims against HP's current and ex-executives, including Whitman, board members and advisers.