Darktrace non-exec director rejected by investors over Lynch connection

By Paul Sandle

LONDON (Reuters) -Shareholders in British cyber security firm Darktrace on Thursday voted against the election of non-executive director Patrick Jacob over concerns about his connection to Mike Lynch, the entrepreneur extradited to the United States to face fraud charges.

Lynch’s Invoke Capital was a founding investor in Darktrace, giving it the right to nominate a representative to its board, and Jacob joined after last year’s AGM. But he was rejected in his first vote on Thursday, with 57% of votes cast opposing his election, according to a stock market announcement.

Lynch, who was charged with fraud over the sale of his company Autonomy to Hewlett Packard for $11 billion in 2011, and his wife hold more than 9% of Darktrace’s shares, according to LSEG data. Lynch has denied any wrongdoing.

One top-20 shareholder informed Darktrace it would be voting against Jacob due to his association with Invoke and Lynch.  

“Mike Lynch’s trial in the U.S. creates unhelpful headline risk for Darktrace, which we view as unwarranted, so any move to distance Darktrace from these headlines is a positive in our eyes,” said the shareholder, who asked not to be named.

“Additionally, we do not believe granting a board seat to Invoke is conducive to helping Darktrace develop and mature as a global business and investment.”

A spokesperson for Invoke Capital said: “We thank Patrick Jacob for his contribution on the Darktrace board.

“We’ll be nominating a new Invoke Capital representative in due course.”

Darktrace has sought to distance itself from Lynch, saying he plays no part in its operations and is not on its board.

Two other directors, David Willetts and Peter Bonfield, were backed by shareholders but received less than 80% of votes cast.

Darktrace said it would engage with shareholders on all three votes to understand their concerns.

(Reporting by Paul Sandle; Editing by Kate Holton, David Evans and Rosalba O’Brien)