The Financial Reporting Council (FRC), a British accounting regulator, said on its web site Monday that it's launched an investigation into the financial reports Autonomy put out between January 1, 2009 and June 30, 2011 right before it was acquired for $11.1 billion by Hewlett-Packard.

HP charged the British company with cooking its books and duping it into overpaying when it wrote off $8.8 billion of its investment in November. It referred the case to the SEC, which called in the Justice Department, and the Serious Fraud Office in Britain.

Mike Lynch, the founder of Autonomy, has roundly denied HP's allegations. Lynch, who made a reported $800 million off the deal, claimed to welcome the FRC's investigation and said in a statement that "As a member of the FTSE 100 the accounts of Autonomy have previously been reviewed by the FRC, including during the period in question, and no actions or changes were recommended or required."

The FRC said its decision was taken following consultation with the Institute of Chartered Accountants in England and Wales (ICAEW).

The probe could take a while and its findings could go to a disciplinary tribunal for a public hearing. It made no mention of Autonomy's auditors, Deloitte.

Lynch isn't spending all his time with the lawyers working out a defense. Instead he and some of the boys from Autonomy - evidently all of the old management team - have turned venture capitalist at a new firm they've set up called Invoke Capital Partners.

They've raised an initial £1 billion ($1.56 billion) from private equity and sovereign wealth funds as well as well-heeled individuals, according to the Telegraph.

Lynch means to bankroll ever-so-clever UK start-ups - mostly the Cambridge University lot - so they can kick off and develop their technology then give them more money so they can acquire big companies and turn into multibillion-dollar operations rather than the other way around like his Autonomy experience, which he found "difficult."

The idea is to prevent them from being picked off in their salad days by investors looking for a quick return on their R&D.

Lynch has already reportedly put money in an Autonomy-like Cambridge spin-out called Featurespace, whose software is supposed to detect when online users are about to churn. Its algorithms are also supposed to prevent fraud.