eDiscovery Daily Blog

Former Autonomy CFO Convicted of Fraud: eDiscovery Trends

Remember the fiasco that was the Hewlett-Packard (HP) acquisition of Autonomy (and our coverage of it back then)?  Back in 2012, HP took a multi billion charge resulting from its acquisition of Autonomy back in 2011, one of the largest acquisitions in the eDiscovery industry at the time (and still).  HP called on US and British authorities to investigate what it called “serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy” before the acquisition.  Those allegations have now led to a conviction.

Legal IT Insider (Former Autonomy CFO & Darktrace director Sushovan Hussain convicted of fraud – hat tip Rob Robinson’s Complex Discovery blog) covered the conviction of Autonomy’s former chief financial officer and ex-Darktrace director Sushovan Hussain, who was found guilty of fraud by a San Francisco court last week.

A 12-member federal jury convicted Hussain of 16 counts of wire and securities fraud. The verdict precedes a $5.1 billion civil suit brought by HP in the UK against Hussain and Autonomy’s founder and former CEO Mike Lynch, scheduled to begin next year. Lynch is counter-suing for $160 million, claiming lost investment opportunities due to reputational damage. He has strongly rejected HP’s claims that management misled HP over the company’s value.

Hewlett-Packard split into two companies in 2015 – Hewlett Packard Enterprise (HPE) and HP Inc.—with HPE eventually selling off parts of Autonomy. The latter company issued a statement on Monday, April 30th saying: “HPE is pleased with the verdict. As we have consistently maintained, Mr Hussain engaged in outright fraud and deliberately misled the market about non-existent sales through a series of calculated sham transactions.”

“Autonomy manipulated their revenue, and quarterly results, making an accurate valuation impossible. That Mr Hussain attempted to depict the fraud as nothing more than a misunderstanding of international accounting rules was, and still remains, patently ridiculous – and the jury has now held him accountable for his role in defrauding HP.”

Naturally, Hussain’s lawyer, John Keker, said he was disappointed with the verdict and intends to appeal.  Between that and the suit against Lynch scheduled for trial next year, this story will still be alive and well for some time to come.

So, what do you think?  Will we see an eDiscovery deal like that again?  Please share any comments you might have or if you’d like to know more about a particular topic.

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