ASIC’s travel ban expiry on Nuix ‘baffling’, as poor record keeping exposed in court fight

The corporate regulator allowed a travel ban keeping the brother of former Nuix CFO Stephen Doyle in the country to lapse – despite an insider trading investigation.

Labor senator Deb O’Neill, who questioned regulators over their handling of the Nuix matter last year, said the decision to allow the ban to lapse was ‘baffling’. Picture: AAP

The corporate regulator allowed a travel ban keeping the brother of former Nuix chief financial officer Stephen Doyle in the country to lapse – giving him the green light to return to Switzerland despite an insider trading investigation.

The Australian Securities & Investments Commission is continuing to probe the sale of $17.8m in shares by Mr Doyle and his brother Ross ahead of the company disclosing it expected to miss prospectus forecasts.

The ban – which had been put in place last June and extended in October – expired on May 30. It followed police raids as part of the investigation into “matters that have come to light subsequent to Nuix’s IPO and listing”.

ASIC alleges Nuix failed to properly report Stephen Doyle’s shareholding, producing company documents that continued to state he held equities despite him transferring 50,000 to his brother in 2015. These 50,000 shares were later subject to a 50:1 share split by Nuix in 2017, but Nuix allegedly continued to state in internal documents that they were owned by Stephen Doyle.

ASIC is also looking into allegations Stephen Doyle leaked confidential financial information to Ross as it prepared to reveal it would miss forecasts.

The two men were alleged to have used a business entity based in Singapore, Black Hat, to dispose of 1.8 million shares. Court documents note most of the proceeds of the sale were sent to Liechtenstein or Switzerland, but $400,000 ended up with the brother’s father, Ronald Doyle.

ASIC said in February it had interviewed Ross Doyle in November and December. An ASIC spokesman on Thursday said the regulator continued to investigate the alleged inside trading, but declined to comment further.

Labor senator Deb O’Neill, who questioned regulators over their handling of the Nuix matter last year, said the decision to allow the ban to lapse was “baffling”.

“If this is an oversight by ASIC, ASIC needs to apologise to Nuix’s investors,” she said. “If this isn’t an oversight and this was a deliberate move by ASIC, they need to explain their reasoning behind this frankly baffling move.”

Former Nuix CEO, Ed Sheehy. Picture: Jane Dempster

Nuix’s former chief executive Eddie Sheehy was separately in the Federal Court on Thursday as part of his dispute with the company over his share options.

Mr Sheehy alleges Nuix failed to hand him the correct number of options while showering other executives in shares.

Nuix’s IPO delivered a windfall for key company figures, with then chairman Tony Castagna handed $80m in shares thanks to 30,000 options he was granted in the business in 2005.

However, the existence of those options has been subject to investigation as they allegedly did not show up in any company documents until 2011.

The court has heard executives at Nuix had intended that almost 540,000 options held by Mr ­Sheehy would expire in 2010 – yet company documents continued to record their existence well after. Macquarie executive David Standen told the court he knew Mr Sheehy’s options had expired, despite Nuix’s records, but saw no need to correct the record.

Thursday’s hearing focused on his potential losses from missing out in his stake in Nuix, with evidence presented the missed windfall could have topped $183m.

Nuix alleges a letter from Mr Castagna spelt out the terms of the options, including its 2010 expiry. But the company’s lawyers have declined to call the former chairman. Nuix argues the options couldn’t be exercised in any case as the business wasn’t “sold”, a necessary requirement.