UK Fraud Office Probes HP's Autonomy Acquisition

British technology firm Autonomy is under an investigation by the Serious Fraud Office and the US department of justice into accusations of accounting irregularities at the firm before it was acquired by the US technology firm Hewlett-Packard (HP).

"As a result of the findings of an ongoing investigation, HP has provided information to the UK Serious Fraud Office, the US Department of Justice and the SEC related to the accounting improprieties, disclosure failures and misrepresentations at Autonomy that occurred prior to and in connection with HP's acquisition of Autonomy," HP said in its quarterly regulatory filing with the US Securities and Exchange Commission (SEC).

The company noted that it had been informed by the US authorities and the SFO about their investigations into the allegations on 21 November and 6 February, respectively.

HP added that it was cooperating with the investigating agencies. Until the recent announcement, the Financial Reporting Council (FRC), which oversees accounting standards, was the only body investigating the allegations.

The PC-maker acquired Autonomy in August 2011 for $11.1bn (£7.5bn, €8.5bn), or 11 times its annual earnings. In November 2012, HP wrote down the value of Autonomy by $8.8bn, blaming that the firm's value had been wilfully inflated. HP has accused Autonomy of "serious accounting improprieties, disclosure failures and outright misrepresentations."

Meanwhile, Autonomy founder and former CEO Mike Lynch has denied HP's allegations and asked the company to provide more evidence to support its claims.

"We note the announcement by the UK's Financial, the Reporting Council (FRC) that it has begun an investigation of the financial reporting of Autonomy for the Period from 1 January 2009 to 30 June 2011," Lynch said last month.

"We are fully confident in the financial reporting of the company and look forward to the opportunity to demonstrate this to the FRC."

In connection with the deal, HP is facing at least eight lawsuits filed by its shareholders, who allege that the company's board and management concealed vital information before the value write-down. Two shareholder advisory firms have urged shareholders to vote against the re-election of a number of HP directors at the company's 20 March annual meeting.

In a separate regulatory filing, HP asked shareholders to re-elect all 11 board members.