The Australian Securities and Investments Commission has taken federal court legal action against ASX-listed tech company Nux and its board for alleged breaches of disclosure laws, as well as deceptive or deceptive conduct around growth predictions, in the wake of the company’s IPO in December 2020. has started. ,
ASIC alleges that Nuix (ASX:NXL) made misleading or misleading statements in the ASX’s announcements on 26 February 2021 and 8 March 2021 while confirming its prospectus fiscal year 2021 forecasts for statutory revenue and annual contract value (ACV) lamps.
Nuix was one of the country’s hottest floats when it listed at $5.31 per share, which was nearly $953 million in less than two years. Its market capitalization in the IPO was $1.7 billion. But since then, a series of nine media reports have raised serious questions about the company’s governance, and its sales forecasts, and the backgrounds of some of those involved in the business.
Nuix’s share price, which hit a high of $11.05 in January 2021, has now dropped to a low of 0.575 cents, losing 77% of their value over the past 12 months.
ASIC was investigating allegations of insider trading in the company, but said yesterday that it had concluded the investigation and would not take any further action.
Instead, the regulator is suing the Nuix board, alleging they violated the duties of their directors by failing to take reasonable steps to prevent Nuix from making misleading statements and violating its continuing disclosure obligations. did.
Directors in the firing line include Chair Jeffrey Bleach, Rodney Vaudrey, Susan Thomas, Daniel Phillips and Sir Ian Lobban.
ASIC alleges that at the time of the February and March 2021 announcements, Nuix was aware that its ACV for FY21 was likely to be significantly lower than forecast.
ASIC President Joseph Longo said: ‘Nuix was a newly listed technology company with a complex business model. This means that investors were heavily dependent on the company to make accurate and timely disclosure of its earnings.
ASIC also alleged that Nuix violated its continuing disclosure obligations, including the following:
disclose its first half FY 2021 ACV result from 18 January 2021 to 26 February 2021 when it publishes its half yearly results; Make corrective disclosures regarding announcements made at ASX on February 26 and March 8, 2021, or announce a downgrade; Announce the downgrade of its prospectus forecasts with effect from April 13, 2021, following a re-forecast of Fiscal Year 2021 ACV and statutory revenue. The downgrade was not announced until 21 April 2021.
A total of $1.2 billion of Nuix shares were traded during the period of the alleged breaches by ASIC.
Longo said that Nux’s ACV results at the end of the first half showed that, far from growing faster than the company forecast for the full year at 18.5%, Nux’s underlying business as measured by ACV was essentially higher than previously. was reduced by about 4%. half.
“It took the Company more than a month as of 26 February 2021 to disclose this material information to the market. Nuix had an obligation to promptly disclose this information,” he added.
ASIC is seeking declarations, monetary penalties and disqualification orders.
In a statement to ASX yesterday, Nuix said it has fully cooperated with ASIC during its investigation of these matters.
Nuix denies the charges leveled against it and the director defendants and intends to defend the proceedings.