ASIC alleges Nuix and board breached continuous disclosure and directors’ duties

The corporate regulator has launched court action against Nuix, claiming the tech group repeated wrong revenue data to the market.

The corporate regulator is seeking to land bans against Nuix’s board as it launches action against the tech company for presenting incorrect information to the market, but has cleared the company’s former chief financial officer and Macquarie Capital.

The Australian Securities and Investments Commission announced on Thursday it had filed action against Nuix in the Federal Court, claiming the company misled the market when it reaffirmed prospectus forecasts in 2021.

ASIC claims Nuix knowingly published two updates on February 26 and March 8, 2021, in which it reaffirmed prospectus forecasts which were wrong.

Nuix told the market on February 26, 2021 it was forecasting revenue to hit $193.5m and expected annualised contract value at the end of the 2021 financial year of $199.6m.

ASIC alleges Nuix’s ACV was in fact 9.6 per cent, or $17.1m, weaker at the end of the first half of the 2021 financial year.

ASIC claims Nuix again wrongly repeated these forecasts on March 8 when it told investors the ACV was “in line with management’s expectations”, but blamed the underperformance on the weakness of the Australian dollar.

The regulator claims Nuix’s internal analysis recorded the reason ACV was below expected was “because of subscription ACV underperformance”.

ASIC alleges Nuix chief executive Rod Vawdrey was told of the likely miss on February 21, but investors were not told in an update days later.

Nuix boss Rod Vawdrey ringing the ASX bell at the tech group’s public debut in 2020. Picture: Bianca De Marchi

Nuix is alleged to have failed to correct the statements and/or announce a downgrade to the forecasts from April 13, 2021 after the 2021 financial year ACV and statutory revenue had been re-forecast. Nuix did not issue a downgrade until April 21, 2021.

The regulator alleges investors traded $1.2m in Nuix shares during that period.

ASIC also alleges Nuix directors Jeffrey Bleich, who is chairman, Rodney Vawdrey, Susan Thomas, Daniel Phillips and Iain Lobban should be banned for their conduct.

“The conduct of Nuix and its directors prevented the attainment of those objects in relation to the listed shares in Nuix and affected market integrity and confidence in the market more broadly,” ASIC alleges.

ASIC chair Joseph Longo said those current and former Nuix directors needed to be “held accountable”, but said the regulator had decided it would take no further action against the company’s CFO, Stephen Doyle, over allegations of insider trading after finding “insufficient evidence to take it any further”.

“I know that will be disappointing to some people,” he said.

Nuix told the market it had fully co-operated with the regulator during the investigation but would fight the allegations made against it and its directors.

“Given the matter is before the court, Nuix will not be providing commentary in relation to the progress of these proceedings,” the company said.

The latest charges against Nuix come after ASIC notified the company it would not be taking action over historical financial statements in the company’s documents.

Macquarie Capital (Australia) will also avoid any action against it by ASIC over its role in Nuix’s listing.

However, Nuix still faces a class action against it in the Victorian Supreme Court and is awaiting the outcome of a Federal Court claim by its former chief executive, Eddie Sheehy, over claims it denied him his full entitlement of shares in the company.

Shares in Nuix fell 4.17 per cent, closing on Thursday at 58c, giving it a market capitalisation of $190.38m.