Creso Pharmaceuticals has been censured by ASX for breaching listing rules

Creso Pharmaceuticals has been censured for a breach of ASX listing rules – but says what about the seven other companies which did the same thing?

Creso Pharmaceuticals says the censure was not needed.

Creso Pharmaceuticals has been censured by the Australian Securities Exchange over a capital raising involving a company related to its former chairman Adam Blumenthal, but the cannabis firm says it doesn’t think the market operator’s action was appropriate.

The ASX and Creso issued a statement on Monday saying the latter had been censured following an investigation into the issue of shares to a related party, Suburban Holdings Pty Ltd, in breach of listing rules.

Company documents show the directors and shareholders of Suburban are Alvin and Debra Blumenthal.

Creso raised $5m through lead adviser EverBlu Capital – which is also chaired by Mr Blumenthal – in March 2022, with Suburban contributing about $1m of this, the ASX statement says.

“Suburban is controlled by a related party of Creso and of Adam Blumenthal,’’ the ASX said.

“At all relevant times, Adam Blumenthal was a director of Creso and the chairman and a major shareholder in and controller of EverBlu.’’

The ASX said it was the responsibility of the company to tell its shareholders before the issue of securities if related parties were taking up shares, and obtain shareholder approval for doing so.

“Creso has engaged in a serious breach of the Listing Rules in breaching Listing Rule 10.11,’’ the ASX said.

Creso itself notified the ASX of the breach on September 14 last year, and told its shareholders via a statement to the ASX on October 25.

The company put out its own statement to the ASX on Monday saying the issue had been blown out of proportion.

“The company does not consider a formal censure appropriate and had provided submissions

to the ASX on this basis on several grounds including, but not limited to, the fact that Creso

Pharma provided the ASX with seven examples of other listed companies breaching ASX

Listing Rule 10.11 in the last three years which did not result in a censure,’’ the company said.

“While the company does not consider a formal censure to be necessary ... the company has accepted it, and rectified the error in accordance with the directives of ASX during FY2022.

“Creso Pharma confirms that other than the issuance of the formal censure notice by

ASX, there are no ongoing consequences as a result of the breach ... or the censure itself, and is pleased that the matter is now resolved.’’

Mr Blumenthal stepped down from his role as chair of Creso in November last year when the company was being investigated by ASIC over matters relating to trading in its securities, with that investigation also involving EverBlu.

The Australian Federal Police raided the Sydney CBD offices of EverBlu Capital on November 17 as part of its investigation into the alleged ramping of a cannabis stock.

“Creso Pharma appears to have become involved in the ASIC investigation because of common directorships between it and its corporate adviser, EverBlu Capital,” Creso told investors in November.

Mr Blumenthal at that time offered to stand aside from his role “in order to distance Creso Pharma’s operations and governance from the ASIC investigation.”

Creso told the ASX on November 22 that ASIC had by then informed it that the company was no longer the subject of its investigation and “the company does not expect that any enforcement action will be taken against Creso Pharma, or any of its current officers or employees’’.

No charges have been laid against Mr Blumenthal.

Creso shares closed steady on 1.1c on Monday.