ASIC sues Noumi’s former execs over disclosure breaches

The then CEO and CFO of Freedom Foods have been slapped with court claims they misled investors, auditors and other directors.

Former Freedom Foods Group CEO Rory McLeod, in 2017 at its Shepparton Processing plant, in Victoria. Picture: Stuart McEvoy, The Australian.

Financial regulator ASIC is suing Noumi’s former chief executive Rory MacLeod and chief financial officer Campbell Nicholas for alleged continuous disclosure failures, breaches of company director and officer duties, and false or misleading conduct.

ASIC has commenced civil penalty proceedings in the Federal Court against Noumi, formerly Freedom Foods, and the executives, alleging the executives misled investors, auditors and directors and allowed the company to breach continuous disclosure laws by failing to disclose a significant writedown.

Freedom Foods is alleged to have failed to disclose material information about the value of inventories in its financial reports for the full year ending 30 June 2019 and the half year ending 31 December 2019, ASIC deputy chief Sarah Court said.

It is also alleged to have failed to disclose material information about its sales revenue, gross profit and profit after tax in its financial report for the half year ending 31 December 2019.

Mr MacLeod resigned from Freedom Foods in June 2020, following a period of forced leave, after Freedom Foods’ board identified a series of accounting discrepancies and wrote down around $60m of inventory losses. Mr Nicholas resigned from the board in the same month.

The board had identified the problems as it moved stock from five external warehouses to its own facilities.

Freedom Foods’ share price dived as much as 21 per cent, to $2.77 in one day after the revelations were made public, angering investors, who questioned why the board had not acted sooner.

A number of parties had been shorting the stock in the days before its discrepancies were disclosed to the sharemarket.

Mr MacLeod, a former investment banker, had been at the company since 2003, initially serving as chief financial officer before becoming managing director in 2012.

ASIC is seeking declarations of contravention, pecuniary penalties, disqualification orders and costs.

Originally published as ASIC sues Noumi’s former execs over disclosure breaches