Lynch’s U.S. legal woes cast shadow on Darktrace

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British entrepreneur Mike Lynch leaves the High Court in London, Britain March 25, 2019. REUTERS/Henry Nicholls

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LONDON, July 22 (Reuters Breakingviews) - Shareholders in UK cybersecurity firm Darktrace (DARK.L) are waking up to founder Mike Lynch’s legal problems. A British court on Thursday rejected his attempt to block an extradition order made by the U.S. Department of Justice, which has accused him of 17 counts of conspiracy and fraud related to Hewlett-Packard’s purchase of Autonomy in 2011, which he also founded. Lynch denies all charges. He can still appeal the court’s ruling.

The potential extradition threat was clear in Darktrace’s April stock market float. Lynch may be forced to sell his 4.5% stake if he is convicted and the 4.5 billion pound cyber firm warned in its prospectus that a prosecution could put the company and prospective shareholders at risk of money-laundering charges. A potential court case could also damage Darktrace’s standing read more , particularly as Lynch is still a member of its science and technology council. The up to 15% slump in the Cambridge firm’s shares following the ruling suggests investors are rattled. The best option for Darktrace may be to sever ties with Lynch altogether. (By Aimee Donnellan)

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Editing by Neil Unmack and Karen Kwok

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