iSignthis suing ASX for $264m damages

Fintech iSignthis alleges the ASX engaged in misleading and deceptive conduct and is suing for $264m in damages.

iSignthis chief John Karantzis says his claim for damages against the ASX is “high stakes”.

Listed payments and identity tech group iSignthis is going after the ASX in a “high stakes” court claim for more than $264m, in damages as it continues to battle to have its stock reinstated to trade after a near-12-month suspension.

The dispute between the fintech and the ASX dates back to October 2019, when the market operator first raised disclosure and governance concerns against iSignthis, noting an investigation by securities regulator ASIC and irregular trade in the group’s shares.

Since then the fintech has on several occasions lambasted the ASX for failing to reinstate its shares, despite lengthy responses to questioning, finally culminating in its first legal claim in December, what it said was related to a leak of confidential information by the ASX.

In the latest escalation on Friday, iSignthis alleged misleading and deceptive conduct by the market operator, claiming damages in excess of $264m arising from the suspension of its shares and publication of the ASX’s reasons for the initial suspension, which it previously sought to suppress. The company is also suing for costs, which totalled $1.03m for the six months to July 31.

Chief John Karantzis claimed the company was treated unfairly by the ASX, and described the case as “high stakes and material” in a statement released to the market.

“Uniquely, 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 1 market,” he said.

“By any measure, the damages claimed and the impact of any adverse finding make this a high stakes and material case for the ASX.”

In stark contrast, the ASX told the market it was defending the proceedings but that they warranted no further disclosure to the market given “this matter is not material”.

“ASX takes its obligation to monitor and enforce compliance with the Listing Rules very seriously, and is defending these legal proceedings,” it said.

Along with the damages, the statement of claim seeks orders to reinstate the company’s shares to trade, remove a statement of reasons for its suspension from the ASX’s platform, as well as the publication a corrective statement.

Further details laid out in the statement of claim reveal that iSignthis had submitted to the ASX more than 237 documents totalling 2440 pages in an attempt to answer its questions, but as of the last correspondence, the ASX remains unsatisfied with the company’s response.

In the company’s June quarter results it said customer receipts were down 20pc from the first quarter to $8.4m, due to the impact of the ASX suspension and COVID-19, while client funds held also decreased during the period “due to a slight reduction in customer confidence as a result of the ASX suspension”.

ISX last traded on October 1 at $1.07 a share, giving it a market capitalisation of roughly $1bn.