Shares in tech company Nuix eased in late trading on Thursday on news that ASIC was taking the company to court for alleged continuous disclosure breaches and misleading or deceptive conduct.
Nuix shares closed down 4.1% to 57.5 cents after being off just 0.4% for much of the session.
ASIC said in a statement on Thursday morning that it had also brought Federal Court proceedings against members of the Nuix board for breaches of their directors’ duties.
In effect ASIC is accusing Nuix of deliberately misleading investors over the company’s growth targets and failing to inform the market when those targets were re-forecast.
ASIC claims Nuix took more than a month to tell the market that forecasts of statutory revenue and annualised contract value in its prospectus were not being materially met.
In a separate statement Nuix denied all allegations made against it and its directors and said it intends to defend against all of the proceedings.
The initial public offering (IPO) of Nuix was billed as the biggest IPO of 2020 and, at the offer price of $5.31 a share, Nuix had a market capitalisation of $1.7 billion at the time of the listing.
ASIC alleges that Nuix made misleading or deceptive statements when reaffirming its Prospectus financial year 2021 forecasts for statutory revenue and for annualised contract value (ACV) in announcements to the ASX on 26 February 2021 and 8 March 2021.
ASIC alleges that at the time of these announcements, Nuix was aware that ACV for financial year 2021 was likely to be materially below forecast, which made those announcements misleading and gave rise to the need for corrective disclosure.
ASIC said that Nuix shares totalling $1.2 billion were traded during the period of the contraventions alleged by the regulator.
In its statement ASIC Chair Joe Longo said ‘Nuix was a newly listed technology company with a complex business model. This meant investors relied heavily on the company making accurate and timely disclosures regarding its earnings.’
‘Nuix’s ACV result at the end of the first half showed that, far from growing rapidly at 18.5 per cent as the company had forecast for the full year, Nuix’s underlying business as measured by ACV had essentially shrunk by almost 4 per cent over the first half. It took the company over a month, until 26 February 2021, to disclose this material information to the market. Nuix had an obligation to promptly disclose this information,’ said Mr Longo.
ASIC further alleges that Nuix’s directors breached their directors’ duties by failing to take reasonable steps to prevent Nuix from making misleading statements and breaching its continuous disclosure obligations. Nuix directors who ASIC alleges breached their duties are Jeffrey Bleich (Chair), Rodney Vawdrey, Susan Thomas, Daniel Phillips and Sir Iain Lobban
ASIC said it is seeking declarations, pecuniary penalties and disqualification orders from the Federal Court.
ASIC also announced that it had also concluded its investigation into suspected insider trading in relation to trading in Nuix shares in 2021 and has decided no further action will be taken.
