ASIC sues Nuix for misleading, deceptive behavior

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Nuix Chairman Jeffrey Bleich, Rodney Vawdrey, Susan Thomas, Daniel Phillips and Iain Lobban are alleged to have breached their duties by failing to take reasonable steps to prevent Nuix from making misleading statements and breaching ongoing disclosure requirements to have.

ASIC Chairman Joseph Longo said at the heart of the case is the allegation that Nuix failed to timely disclose to the market the fact that forecasts were essentially not being met.

“That’s a disclosure standard that we have in Australia, we’ve had it for many years. And that’s what this case is about,” he said.

“The Company has a duty to make these disclosures in a timely manner. And what we are saying is that the directors failed to take reasonable steps to prevent these breaches, in other words we contend that they failed to exercise the required level of care and diligence to ensure that the company lived up to its obligations follows.”

Former Treasurer Josh Frydenberg oversaw a relaxation of continuous disclosure laws last year. Under the amendments, companies and directors will only be liable for violations of the Continuous Disclosure Act if they acted with “knowledge, recklessness or negligence” in making market-sensitive updates.

Longo said ASIC does not believe these legislative changes would affect their case against Nuix.

“It is not an issue for us in this process. Our claim is that we can identify the violation under both the new regime and the old regime,” he said.

“The continuous disclosure system is a fundamental part of our market regulation system that has been in place for many years. It is fundamental for transparent and fair markets and for investors, therefore ASIC takes violations of the continuous disclosure regime involving public companies very seriously.”

If the allegations are proven by the court, ASIC will seek determinations of violations, fines and disqualification orders in federal court.

In a statement to the ASX on Thursday, Nuix said it fully cooperated with ASIC during the investigation.

“Nuix denies the allegations against them and the allegations against the defending directors and intends to defend itself against the proceeding,” the company said.

“As the matter is before the court, Nuix will not comment on the progress of this proceeding.”

It comes amid a separate, long-running legal battle between Eddie Sheehy, a Nuix co-founder and chief executive between June 2006 and January 2017, and Nuix over whether he is entitled to 22.6 million shares of the company. He no longer held an interest in the company when it was listed on the ASX in December 2020.

Nuix provides data analysis software for international regulators, tax officials and law enforcement agencies such as the US Department of Justice, the UK Serious Fraud Office and the AFP.

https://www.smh.com.au/business/banking-and-finance/asic-sues-nuix-for-misleading-deceptive-conduct-20220929-p5blvj.html?ref=rss&utm_medium=rss&utm_source=rss_business ASIC sues Nuix for misleading, deceptive behavior

Brian Lowry

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