iSignthis court action escalates tussle with ASX

Legal action is a significant escalation in the ongoing discussions between iSignthis and the market operator.

The fintech’s chief executive, John Karantzis, said the market operator had failed to justify its decision to put iSignthis shares on ice. Picture: iStock

Fintech darling iSignthis is taking the ASX to Federal Court, alleging the market operator had leaked confidential information about the company’s operations.

The legal action is a significant escalation in the ongoing tussle between iSignthis and the market operator, which saw the fintech’s shares suspended from the market indefinitely in October

The fintech, once valued at over a billion dollars, offers payments and identity verification services and is under the microscope over its disclosures policy governance and shareholder structure. The issues first hit the headlines in September after a damning report from proxy advisers Ownership Matters.

ISignthis’s shares were subsequently suspended as the ASX started its review, which has seen the fintech offer substantial information to the market operator.

According to the statement of claim lodged by iSignthis, the company alleges that the ASX has sought an inordinate amount of information from the fintech, some which had subsequently been leaked and received by a short seller.

READ MORE: iSignthis calls for action on report | iSignthis on hold amid ASIC probe

The fintech’s chief executive, John Karantzis, said the market operator had failed to justify its decision to put iSignthis’s shares on ice.

“Initiating legal action against the ASX is not a decision we as a company and a board have taken lightly,” he told shareholders on Thursday.

“Unfortunately the ASX, by its actions, has embarked on a mission to harm iSignthis for reasons that we simply cannot comprehend.”

According to Mr Karantzis, the ASX has sought to punish iSignthis for perceived historic offences that have never been detailed or explained to the company or its shareholders.

“Everyone should be accountable, including the ASX,” he said.

ISignthis, alleges that ASX’s actions raise issues of procedural fairness and good faith, with the continuing suspension damaging the fintech’s standing with investors and the market.

The fintech told the market in November that the ASX’s initial decision to suspend its shares had not been made at the behest of the Australian Securities and Investments Commission (ASIC), which is conducting its own inquiries into iSignthis.

The market operator is standing by its actions, with a spokesman saying it will vigorously defend itself against the allegations

“ASX informed ISX that it would give the company draft findings about its compliance this week.”

“ISX has now chosen to take the matter to court, ASX intends to vigorously defend its actions.”

Meanwhile, the embattled fintech has also written to ASIC to complain about the report released by Ownership Matters, alleging that it may have contravened sections of the Corporations Act and caused commercial damage to iSignthis.

The ASIC correspondence repeats some of the defences first put up by iSignthis in September when the Ownership Matters report was first circulated, raising a series of governance issues.

But it also sets out an argument for alleged damages that the lawyers claim the global payments processor has suffered since the Ownership Matters report was released.

A spokesman for Ownership Matters told The Australian: “We are not being investigated by ASIC, and we don’t expect to be.”

An ASIC spokesman declined to comment other than to say the regulator was “aware of the situation, following it closely and in contact with the ASX”.

While companies mounting legal action against the ASX is rare, it’s not without precedent.

In October energy minnow Gasfields took the ASX to the News South Wales Supreme Court in bid to get reinstated on the bourse. The company had fallen foul of the ASX in March 2018 after it raised concerns about the financial condition of the company.

While the company was temporarily reinstated by the ASX, it subsequently discontinued its legal action and was removed from the official list in November.