Re: HPE going after Mike Lynch's estate

On 9/17/2024 9:58 PM, Chris Townley wrote:

On 18/09/2024 02:12, Arne Vajhøj wrote:

And I am a little bit puzzled that you believe that
the company should try and claw back severance/bonus
of a an ex-CEO for negligence in an
acquisition, because it may deter other CEO's from
doing the same, but you don't believe that the
company should try and claw back the gain of
company sale based on fraudulent accounting practices
from the company's CEO? The CEO avoided jail because
the court did not find it proven that he knew about the
fraudulent accounting practices, but while not knowing
is not an criminal offense, then it is still
negligence and clawing back the gain may deter other
CEO's from doing the same.

 Over here in the UK, we have a legal principle of Caveat Emptor

That principle is not UK specific.
But I don't think it is relevant.
It means that buyer can not sue seller related to information
buyer did not ask for.
It does not mean that buyer can not sue seller related to
fraudulent information provided.
As https://en.wikipedia.org/wiki/Caveat_emptor state:
<quote>
Under the principle of caveat emptor, the buyer could not recover damages from the seller for defects on the property that rendered the property unfit for ordinary purposes. The only exception was if the seller actively concealed latent defects or otherwise made material misrepresentations amounting to fraud.
</quote>
And the UK high court has decided that it was fraud.
https://www.bbc.com/news/uk-england-cambridgeshire-60170510
<quote>
HP sued its founder and former chief financial officer, claiming they "artificially inflated Autonomy's reported revenues, revenue growth and gross margins".
Mr Justice Hildyard said HP had "substantially won" its case.
</quote>
https://www.theguardian.com/business/2022/jan/28/hewlett-packard-wins-civil-case-against-mike-lynch-over-autonomy-sale
<quote>
Hewlett-Packard has won its six-year civil fraud case against Mike Lynch, the man once hailed as Britain’s answer to Bill Gates, after a high court judge ruled that he duped the US firm into paying £8.2bn for his software firm Autonomy.
Lynch, who was on Friday waiting to find out if he could be extradited to the US to face a separate criminal trial, was found to have defrauded HP by manipulating Autonomy’s accounts to inflate the value of the company. He has always denied the accusation and said on Friday that he would appeal.
“Claimants have substantially succeeded in their claims in this proceeding,” said Mr Justice Hildyard, after a 93-day trial during which 28,000 documents were considered as evidence..
He said the damages were likely to be significantly less than the $5bn claimed by Hewlett-Packard (HP) and successor companies, while he also cast doubt on the reliability of some of the US firm’s witnesses.
However, he ruled that HP had been induced into overpaying for the takeover, due to fraud perpetrated by Lynch and Autonomy’s former finance director, Sushovan Hussain, who is in jail in the US after being found guilty of fraud relating to the same deal .
</quote>
I assume that Mr Justice Hildyard has heard about caveat emptor. But
did not consider it a valid defense.
Arne