Hewlett-Packard has said it will pay California $14.5 million to settle a civil case related to board-leak investigations that led to the resignation of chairwoman Patricia Dunn.
HP said that under the agreement, filed in Santa Clara County Superior Court, it would also put measures in place to ensure its internal investigations comply with state law.
During the company's internal investigation, investigators impersonated HP board members, employees and journalists to obtain their private telephone records.
The actions, which came to light in September, sullied the reputation of a Silicon Valley stalwart that prided itself on integrity.
California Attorney General Bill Lockyer filed criminal charges against Ms Dunn, who resigned on September 22nd, and four others in October because of tactics used in HP's efforts in 2005 and 2006 to find the source of media leaks.
"The Hewlett-Packard incident has helped shine a national spotlight on a major privacy protection problem," Mr Lockyer said.
"Fortunately, Hewlett-Packard is not Enron. I commend the firm for co-operating instead of stonewalling, for taking instead of shirking responsibility."