- Embattled fintech company iSignthis (ISX) is now seeking $264 million in damages from the ASX as the feud between the two entities escalates
- iSignthis said the damages are the result of the ASX’s Statement of Reasons for the ongoing suspension of ISX shares, which was published in May
- ISX shares have been suspended since early October 2019 and the company took legal action against the ASX in December
- In its Statement of Reasons, the ASX said it had some “serious questions” about the legitimacy of performance shares held by iSignthis directors
- iSignthis, however, claims the Statement of Reasons is full of conjecture and inaccuracies and has subsequently damaged the company and its reputation
- ASX acknowledged the new statement of claims today but said it does not consider the matter material
- iSignthis shares last traded for $1.07 on October 1, 2019
Embattled fintech company iSignthis (ISX) is now seeking $264 million in damages from the ASX as the feud between the two entities escalates.
iSignthis told shareholders this afternoon it has filed an amended statement of claim against the ASX after the share market operator published a Statement of Reasons for the ongoing suspension of ISX shares in early May.
iSignthis CEO John Karantzis said the amended statement of claim now makes the court battle a “high stakes and material” case for the ASX.
“The ASX now needs to demonstrate to the Federal Court that its ‘Statement of Reasons’ is supported by evidence, and not the mere conjecture that we claim it is,” John said.
“Uniquely, the ASX as a market operator may have misled and deceived the market that it is obligated to maintain on a fair, transparent, and orderly basis, throwing doubt on its ability to manage a Tier One market,” he said.
iSignthis said the amount claimed in damages will likely increase from now until the ASX issues a corrective statement and an apology.
What’s the battle about?
At the forefront of the scuffle is the ongoing suspension of iSignthis shares, which have not been allowed to trade on the ASX since early October 2019.
The ASX said iSignthis shares were initially frozen due to volatility in the company’s share price combined with media speculation. Over the next two months, iSignthis would answer a string of questions from the ASX, but the answers did not seem to satisfy the share market operator.
As such, iSignthis took the matter to the Federal Court in early December 2019. Importantly, iSignthis was not seeking any damages at the time but rather wanting to get its shares back up for trade.
What followed was an interlocutory injunction sought by iSignthis to keep the ASX from publishing its Statement of Reasons for the suspension, which ISX claimed was riddled with inaccuracies.
Nevertheless, iSignthis’ injunction application was dismissed by the court, and ASX released the document to the public.
Performance share concerns
In the Statement of Reasons, ASX said it has some “serious questions” about the legitimacy of some 337 million performance shares held by ISX directors.
Essentially, the shares were only to be converted to ordinary shares upon ISX hitting some key revenue milestones. Thought ISX claims to have hit these milestones in June 2018, ASX suspects something fishy was going on.
In its Statement of Reasons, the ASX said the sudden short-term contracts taken on by ISX to hit its revenue milestones were “out of the ordinary”.
ASX is questioning whether the performance shares are rightfully held, and as such is keeping ISX frozen on market; lifting the share suspension means the holders of these shares can immediately sell them on-market and pocket the profits.
The ASX said measures need to be put in place to ensure the current performance-share-holders cannot sell the shares until the Australian Securities and Investments Commission (ASIC) has had a chance to investigate the situation.
ISX fighting back
When the Statement of Reasons was released, ISX claimed it was full of conjecture and contained a “number of erroneous and unwarranted conclusions”.
This is the basis for today’s updated statement of claims; ISX no longer just wants its shares back on the market but claims the ASX document has caused some serious damage to the company and its reputation.
The ASX acknowledged the updated statement of claims and will defend the legal proceedings.
However, contrary to John’s words, ASX said it does not consider the matter material and, as such, said the court battle does not require further disclosure to the market.
Interestingly, ASX didn’t mention the $264 million in new damages in its own market update and said the news was not price-sensitive.
ASX shares are currently down by 1.46 per cent and worth $88.60 each.
iSignthis shares last traded for $1.07 on October 1, 2019.