Investigation by the Serious Fraud Office into accusations against Autonomy
The Serious Fraud Office (SFO) in the UK has initiated an investigation into the accounting practices of Autonomy, a Cambridge-based information management provider, following allegations made by Hewlett-Packard (HP).
HP, which bought Autonomy for around $10.2 billion in 2011, has provided the SFO, US Department of Justice, and Securities and Exchange Commission with information related to accounting improprieties, disclosure failures, and misrepresentations at Autonomy before its acquisition.
The investigation by the SFO is focused on the alleged artificial inflation of Autonomy's reported revenues, revenue growth, and gross margins, which HP claims misled them and led to an $8.8 billion writedown of Autonomy's asset value shortly after purchase.
Alan Pelz-Sharpe, an information management analyst, reported Autonomy to the SFO before HP's acquisition. Pelz-Sharpe passed on a dossier of allegedly incriminating information on Autonomy's accounting practices to the SFO.
The SFO has assured that the use of Autonomy's document management tool, Introspect, does not pose a conflict of interest in the investigation. The investigation is ongoing, and no further comments will be made while the investigation is underway.
It is important to note that the accounting improprieties, misrepresentations, and disclosure failures alleged by HP occurred prior to the acquisition. The UK SFO closed its probe in 2015 due to insufficient evidence on some points; however, US authorities pursued criminal charges against Autonomy’s former CFO Sushovan Hussain and others. Hussain was found guilty of fraud in the US and sentenced to prison.
In civil litigation in the UK starting in 2019, HP alleged that Autonomy's founder, Mike Lynch, and Hussain committed fraud by artificially inflating financial metrics. The High Court ruled in 2022 that HP substantially succeeded in proving these claims, though damages were later reduced. In 2025, the court ordered Lynch’s estate and Hussain to pay HP about £740 million in damages.
The SFO is currently making inquiries to ensure it can continue as the investigating body. The investigation is in response to HP's accusations and marks the first time the SFO has been involved in the investigation. The SFO had not been involved prior to receiving the dossier from Pelz-Sharpe.
In summary, the key alleged issues at Autonomy were:
- Artificial inflation of reported revenues, revenue growth, and gross margins
- Serious accounting improprieties leading to misrepresentation of financial health
- Disclosure failures that misled HP at acquisition, causing them to overvalue Autonomy by billions
- These allegations formed the basis of US criminal prosecution and UK civil litigation by HP against Lynch, Hussain, and others.
The UK investigation was closed without charges partly due to evidentiary challenges, but related US criminal proceedings found fraud by Autonomy’s CFO. The civil case focused on financial misrepresentations and resulted in a substantial damages award to HP, though lower than originally sought.
No other detailed accounting allegations were reported in the sources beyond the emphasis on inflated financial figures and misstatements related to revenue and gross margins before HP’s acquisition.
Business and finance news outlets are reporting that the Serious Fraud Office (SFO) in the UK has launched an investigation into Autonomy, a Cambridge-based tech company, following allegations made by Hewlett-Packard (HP) about accounting improprieties, misrepresentations, and disclosure failures. The SFO is also exploring crime-and-justice sectors, as Autonomy's alleged actions led to HP writing off £8.8 billion from Autonomy's asset value soon after the acquisition. The investigation is focusing on the furnishing of false financial data to mislead potential buyers, with specific emphasis on the artificial inflation of Autonomy's reported revenues, revenue growth, and gross margins.
