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Mike Lynch uses $50mn in Darktrace shares to secure US bail

Mike Lynch, the billionaire founding father of UK software program group Autonomy, has used round $50mn value of shares in British cyber safety group Darktrace to pay for his bail as he awaits trial for fraud within the US.

The British entrepreneur, who was extradited to the US earlier this month, has posted round 14.6mn shares in Darktrace. This quantity constitutes round half of his holding and is now frozen by the US courtroom, in accordance with courtroom paperwork seen by the Monetary Instances. He additionally used round $15mn in money as a part of the bail settlement.

Lynch faces a felony trial in California over 17 prices together with conspiracy to commit wire fraud and securities fraud linked to the $11bn takeover of Autonomy by Hewlett Packard Enterprise in 2011. He faces a most 25 years in jail if discovered responsible of all prices. Lynch has at all times denied any wrongdoing and has entered a not responsible plea.

Darktrace has for years struggled to disentangle itself from ties with each Lynch and Autonomy, which have weighed on investor sentiment within the British start-up.

Various hedge funds have accused the cyber safety group of deploying related gross sales techniques to Autonomy, although Darktrace has denied any irregularities in its accounting practices.

Darktrace’s chief govt Poppy Gustafsson was beforehand Autonomy’s company controller and helped arrange Darktrace utilizing funds partly from Lynch.

The felony case Lynch faces centres on claims that the software program group’s accounts have been manipulated to flatter its ebook, main HP to pay an additional $5bn when it acquired Autonomy in 2011. Autonomy’s former chief monetary officer Sushovan Hussain was convicted within the US in 2018 and is serving 5 years in jail.

After nearly 4 years combating extradition within the British courts, Lynch misplaced his last attraction in April, arriving in California in early Might on a business flight accompanied by US marshals.

A choose in California ordered Lynch to pay a $100mn bail bond secured by $50mn in money or shares following a listening to shortly after his arrival in San Francisco. Lynch is presently beneath home arrest in California beneath 24-hour surveillance.

A spokesperson for Darktrace stated: “Dr Lynch has no operational, advisory or another position at Darktrace. His relationship with Darktrace is only restricted to his shareholding within the enterprise. These are publicly traded shares and his choices on learn how to use his shareholding stay his personal.”

The 14.6mn shares that Lynch used as a part of his bail, first reported by The Telegraph, represent round half of his 4.5 per cent stake within the firm, value round $95mn.

Lynch’s spouse, Angela Bacares, owns roughly 6.5 per cent of the corporate’s shares, value round $136mn, however has progressively been offered down round half of her holding since late 2021.

The shares shall be held by the US courtroom till the courtroom case ends.

Lynch’s spokesman didn’t reply to a request for remark.