The federal government slapped a $750,000 fine on Deutsche Bank AG's investment management division Tuesday for failing to disclose its conflict of interest in the hard-fought 2002 vote over Hewlett-Packard Co.'s $19 billion acquisition of Compaq Computer Corp.

Deutsche Asset Management neglected to tell its clients that the company's investment banking division was working for HP during its proxy fight against dissident director Walter Hewlett, the Securities and Exchange Commission said.

HP paid Deutsche Bank $1 million for "market intelligence" during the proxy fight, with another $1 million contingent on the deal's success.

At first, Deutsche Asset Management voted 17 million HP shares held by its clients against the Compaq acquisition. But the votes were switched in favor of the deal after a last-minute pitch by HP's top two executives.

The SEC noted that HP's pitch came after senior executives in Deutsche Bank's investment banking arm contacted top members of the asset-management division, who then agreed to hear HP's side again. When Deutsche asset managers were reconsidering their vote, they were told about the investment banking unit's relationship with HP, the SEC said.

A short time later, on the morning HP held its shareholder vote on the Compaq acquisition in a Silicon Valley auditorium, Deutsche Asset Management cast the 17 million shares in favor of the deal.

The SEC did not find that the outcome of Deutsche Asset Management's vote was affected by the investment bank's relationship with Hewlett-Packard. But it said Deutsche Asset Management should have disclosed the relationship to its clients so they could have decided for themselves how to proceed.

"The message is that the process matters," said Helene Morrison, district administrator for the SEC's San Francisco office.

Deutsche Bank agreed to pay the $750,000 fine but did not admit or deny the SEC's findings. The firm said in a statement that "even before today's settlement, we voluntarily strengthened our policies regarding information barriers to ensure that proxies will continue to be cast in the best interests of our advisory clients."

HP's purchase of Compaq was approved 51 percent to 49 percent, making it one of the closest proxy contests in years. The winning margin was 45 million votes, so Deutsche's switch did not affect the outcome.

Even so, it led to some of the most intriguing moments in the vicious battle over the deal, which was opposed by heirs of HP founders William Hewlett and David Packard.

At one point, after the deal won initial approval but was being challenged in court by Walter Hewlett, a pre-vote voice mail from HP head Carly Fiorina to chief financial officer Bob Wayman surfaced in which Fiorina had suggested they do something "extraordinary" for Deutsche Bank and another firm.

Later, attorneys for Walter Hewlett revealed that in her last-minute conference call with Deutsche money managers, Fiorina reminded them their decision was "of great importance to our ongoing relationship." Deutsche's top investment official was recorded saying the firm's vote was highly sensitive and needed to be changed "as fast as humanly possible."

Eventually, Chancery Court Judge William B. Chandler in Wilmington, Del., cleared Fiorina and Wayman of wrongdoing, saying nothing definitively indicated they threatened to withhold future business from Deutsche Bank.

However, the judge said the evidence raised troubling questions "about the integrity of the internal ethical wall that purportedly separates Deutsche Bank's asset management division from its commercial division."