Darktrace hires EY for independent review of finances

British cyber security company Darktrace said on Monday it had commissioned a third-party review of its finances by EY, weeks after a short-seller questioned its results.

Darktrace said the appointment of the auditor EY, formerly known as Ernst & Young, was a sign of its confidence in its financial processes.

Those were criticised by New York-based Quintessential Capital Management in a 70-page report on Jan. 31. The group said it was “deeply skeptical about the validity of Darktrace’s financial statements,” prompting Darktrace to issue a rebuttal.

Darktrace’s chief executive Poppy Gustafsson said then the company was run with “the greatest integrity”.

The company, which was listed in April 2021, is backed by Mike Lynch, the British tech entrepreneur who was ruled by a British judge to have masterminded an elaborate fraud when he sold his company Autonomy in 2011. Lynch had denied the charges.

Lynch and his wife remain investors, according to Refinitiv data, but he plays no part in running it and is not on its board, Darktrace has said.

Darktrace said in its statement on Monday that it was appropriate for a third party review to confirm the company’s financial position.

“The board believes fully in the robustness of Darktrace’s financial processes and controls. As a sign of that confidence, we have commissioned this independent third-party review by E&Y,” chairman Gordon Hurst said.

Shares in Darktrace have risen 33% from a low of 198 pence on the day the critical report was published. They closed at 263 pence on Friday, valuing the group at about 1.88 billion pounds ($2.26 billion). Reuters