Some of the murky details surrounding Mark Hurd's abrupt exit from Hewlett-Packard Co last summer may be about to clear up, with federal regulators on the scent.

A source tells Reuters the U.S. Securities and Exchange Commission is now looking into the events surrounding Hurd's August 6 departure, after months of media and market speculation that captivated Silicon Valley.

Sexual harassment claims by a former contractor had prompted an internal investigation, which then turned up inaccurate expense reports. HP said in August that Hurd's actions had displayed a lack of judgment.

Some investors say privately they still do not fully understand why Hurd was forced to resign, which wiped out billions of dollars in shareholder value. HP shares plunged on the news and remain nearly 10 percent lower than their close on August 6.

Although the precise nature of the SEC's probe is unclear and may not necessarily give rise to new information or charges against Hurd or HP, attention from regulators can sometimes snowball, said those who know the market watchdog well.

Nothing good comes from having federal regulators crawling all over you, said Michael Robinson, former public affairs and policy chief at the SEC and now a senior vice president at Levick Strategic Communications.

Robinson said that no one knows how the SEC probe will play out, but the investigation was almost inevitable given that HP's stock is widely held by institutional investors and unanswered questions linger over the Hurd affair.

This is kind of front-page news allegation that you just can't ignore, he said.

Hurd's messy exit has hurt his reputation, but it has brought just as much criticism and examination of decisions made by HP's board.

The question that observers and investors should ask is does this board have control and are they doing their job, said James Post, a professor at Boston University's School of Management.

QUESTIONS LINGER

Given the information that has dribbled out since Hurd's departure, Post said HP's stated reason for his ouster -- inaccurate expense reports -- was rather disingenuous.

The saga has also touched off a rancorous war between HP and Oracle Corp , which hired Hurd a month after he left HP.

Hurd was accused of sexual harassment by contractor Jodie Fisher, who worked for his office. Although a board investigation found no evidence to back that claim up, HP chose to disclose the allegation when it announced Hurd's resignation.

HP used an outside law firm, Covington and Burling, to help with its internal investigation. It also consulted with APCO, a public relations firm.

It emerged last month that Fisher also claimed Hurd divulged details about HP's plans to acquire Electronic Data Systems Corp before the $13.9 billion deal was announced in 2008--a potentially more explosive allegation.

But HP never disclosed that claim, and Hurd's representatives have categorically denied it. Fisher later reached a private settlement with Hurd and then sent a letter to him stating that her initial accusation letter contained many inaccuracies.

HP on Tuesday declined to comment on its disclosures related to Hurd's exit. The former CEO has also declined to comment through his representatives.

The company has said it will cooperate with the SEC probe. The Wall Street Journal first reported on Monday the SEC is looking into the claim that Hurd shared information with Fisher about EDS, and is also examining his expense account activity.

Christopher Cooke, an attorney with Cooke Kobrick & Wu and a former branch chief with the enforcement division of SEC, said Fisher would have had to trade on the information about EDS or pass it to someone who did, in order for it to amount to insider trading.

There's no insider trading if there's no trading, he said.

Cooke also said if Hurd did share information about EDS with Fisher, it was likely a violation of the company's rules, but HP would not be required to disclose that information, since it was not a material development in its business.

Cooke said he expects the SEC probe to move quickly, given that the case is not overly complex.

(Reporting by Gabriel Madway, editing by Edwin Chan and Matthew Lewis.)

Insider trading Mark Hurd HP