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- The Australian Securities and Investments Commission (ASIC) is suing Nuix (NXL) for allegedly misleading or deceiving investors with false growth forecasts back in 2021
- The corporate watchdog alleges the software company breached its disclosure obligations in announcements made between January 18 and April 21 last year
- ASIC Chair Joseph Longo says Nuix had forecast annualised contract value growth of 18.5 per cent but failed to tell shareholders when its ACV actually shrunk by almost 4 per cent
- According to ASIC, around $1.2 billion in Nuix shares were traded during the period of the alleged contraventions
- Nuix has denied the allegations and says it plans to defend the proceedings in court
- Shares in Nuix are down 1.67 per cent to 59 cents at 3:56 pm AEST
Australia’s corporate watchdog has sued software company Nuix (NXL) for allegedly misleading or deceiving investors with false growth forecasts back in 2021.
The Australian Securities and Investments Commission (ASIC) claimed the company, through a handful of directors, breached its disclosure obligations in announcements made between January 18 and April 21 last year.
ASIC has brought a case against the Nuix board to the Federal Court, launching its proceedings against current Nuix Chairman Jeffrey Bleich and directors Susan Thomas and Sir Iain Lobban, as well as former CEO Rodney Vawdrey and director Daniel Phillips.
Nuix was the largest IPO of 2020, raising shares at $5.31 a pop and listing on the ASX with a market cap of $1.7 billion. While the company saw explosive share price growth in its first few months as a listed entity, its downfall was just as dramatic: shares now trade at 60 cents after peaking at around $11 in January 2021.
ASIC alleged the Nuix board knowingly published “misleading or deceptive” statements regarding its annualised contract value (ACV) forecasts from its prospectus.
ASIC Chair Joseph Longo said Nuix had initially forecast rapid growth for the first half of 2021 but missed its targets — without telling shareholders.
“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,” Mr Longo said.
“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.”
If the board was aware it would not hit its forecast numbers, ASIC said, it needed to release corrective disclosure or a guidance downgrade to keep investors adequately informed.
ASIC said Nuix should have announced this downgrade to its prospectus forecasts from April 13, 2021, after it had re-forecast FY21 ACV and statutory revenue. The company did not announce a downgrade until April 21.
Further ASIC also alleges that Nuix broke its disclosure obligations by announcing its first-half ACV result for the 2021 financial year from January 18 together with its half-yearly results on February 26.
According to ASIC, around $1.2 billion in Nuix shares were traded during the period of the alleged contraventions.
“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,” Mr Longo said.
ASIC is seeking declarations, pecuniary penalties and disqualification orders from the Federal Court.
Nuix today denied the allegations and said it would defend the proceedings in court.
Shares in Nuix were down 1.67 per cent to 59 cents at 3:56 pm AEST.
