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ASIC completes aspects of investigation into Nuix
The national corporate regulator has advised listed global software company Nuix that it has completed certain aspects of its investigation into the company, while a national plaintiff firm proclaims it is still pursuing a class action against it.
Jerome Doraisamy
In June of last year, the Australian Securities and Investments Commission commenced an investigation into the floating of Nuix, asking the global software company to retain financial statements and a 2020 prospectus.
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The investigation – including into the company’s now-former chief financial officer Stephen Doyle, who was terminated by Nuix in mid-June 2021 – surrounded suspected contraventions of the Corporations Act in relation to their FY2018, 2019 and 2020 financial statements and the IPO prospectus lodged with ASIC and the ASX.
National plaintiff law firm Shine Lawyers flagged in June of last year that it was considering proceedings against Nuix on behalf of shareholders, and then in late November, the firm launched a class action in the Supreme Court of Victoria.
The proceedings allege, Shine said at the time, that the company had provided inadequate guidance on revenue, misled sales forecasts, and breached the company’s continuous disclosure obligations.
Speaking at the time of the launching of the proceedings, Shine class actions practice leader Craig Allsopp said the firm’s investigation has revealed that the “company’s prospectus and financial forecasts may have misrepresented or omitted financial information and potential risks, which was misleading and deceptive to investors”.
“This inflated forecast has ultimately cost shareholders hundreds of millions of dollars. Our class action aims to recover these losses for the thousands of investors impacted by Nuix Limited’s alleged misconduct,” he said.
In a statement to the market earlier on 10 February 2022, Nuix said it had been notified by ASIC that it had completed the aspects of its investigation into the company’s financial statements for the periods ending 30 June 2018, 30 June 2019 and 30 June 2020, as well as in relation to Nuix’s prospectus, dated 18 November 2020.
The regulator determined, Nuix noted, that it “will not take any further action” in relation to those matters.
The aspect of ASIC’s investigation pertaining to Nuix’s market disclosure in the period since its listing has not yet been completed.
Nuix said that it “continues to cooperate fully” with the investigation.
Speaking to Lawyers Weekly following Nuix's announcement, Mr Allsopp said that Shine will still pursue its class action against the company.
"ASIC has only dropped one investigation, into the IPO, and is still investigating Nuix’s conduct post-listing. Our claim makes allegations both in relation to the IPO and in relation to Nuix’s conduct after listing," he said.
"Because most of the options available to ASIC to pursue action against companies are criminal in nature or involve penalties, the burden of proof for any action that ASIC might take against a company or directors is generally higher than that required for shareholders taking civil action."
"The fact that ASIC has determined to take no further action in relation to its investigation of the Nuix IPO is very unlikely to have any impact on the Nuix shareholder class actions. The majority of shareholder class actions commenced in Australia involve conduct that ASIC has either not investigated at all or has investigated but taken no further action," Mr Allsopp explained.
The news follows Nuix’s confidence in August of last year that it had complied with accounting and disclosure obligations in the wake of ASIC’s probe, optimism following a “challenging year”, and also the company’s acquisition of Boston-headquartered software company Topos Labs in September 2021.
