The Australian Securities and Investments Commission (ASIC) has begun proceedings in the Federal Court against software company Nuix for alleged “deceptive conduct”.
The regulator also brought claims against the Nuix board, including chair Jeffrey Bleich and directors Rodney Vawdrey, Susan Thomas, Daniel Phillips and Sir Iain Lobba.
Nuix has denied ASIC's claims and said it will not provide commentary on the case.
The claims against the software company were filed in the Federal Court on Wednesday, with documents accusing Nuix and its directors of taking actions that "affected market integrity and confidence in the market more broadly”. [pdf]
ASIC alleges the company “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” in February and March of 2021.”
ASIC claims Nuix was aware the ACV for the 2021 financial year was “likely to be materially below forecast”, making its announcements “misleading and gave rise to the need for corrective disclosure”.
It also alleges Nuix breached its continuous disclosure obligations by:
- not disclosing its first half financial year 2021 ACV result from January 18 2021 until February 26 2021 when it published its half year results.
- not correcting announcements made to ASX on February 26 and March 8 2021, or announcing a downgrade to its forecasts until 21 April 2021.
ASIC chair Joseph 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 percent as the company had forecast for the full year, Nuix’s underlying business as measured by ACV had essentially shrunk by almost 4 percent over the first half," Longo said in a statement.
“It took the company over a month, until February 26 2021, to disclose this material information to the market. Nuix had an obligation to promptly disclose this information."
A total of $1.2 billion worth of shares were traded during the period of breaches claimed by ASIC, with the regulator now seeking declarations, pecuniary penalties and disqualification orders from the Federal Court.
Nuix denies allegations
Nuix released a statement denying the allegations by ASIC and said it “intends to defend the proceedings”.
The company said it will not “be providing commentary” in regards to the proceeding, and that it “has fully cooperated with ASIC” throughout its investigations.
In November last year, Nuix shareholders filed their own class action against the software maker alleging that "misleading" financial guidance and disclosures had cost them hundreds of millions of dollars.
Filed in the Supreme Court of Victoria, shareholders claimed Nuix gave investors "inadequate guidance on revenue, misleading sales forecasts, and breached the company’s continuous disclosure obligations," Shine Lawyers said in a statement.
ASIC also said today that it had concluded an investigation into suspected insider trading in relation to trading in Nuix shares in 2021, deciding “no further action will be taken.”
