Aussie software firm Nuix taken to court over disclosures

Australian investigative analytics and intelligence software Nuix has been taken to court by the Australian Securities and Investments Commission (ASIC) for alleged continuous disclosure breaches and misleading or deceptive conduct.

ASIC alleges Nuix made misleading or deceptive statements when reaffirming its prospectus financial year 2021 forecasts for statutory revenue and for annualised contract value (ACV) in ASX announcements on 26 February 2021 and 8 March 2021.

ASIC alleges that Nuix at the time were aware that its ACV for financial year 2021 “was likely to be materially below forecast”, which “made the announcements misleading” and should have been corrected.

“Nuix was a newly listed technology company with a complex business model. This meant investors relied heavily on the company making accurate and timely disclosures regarding its earnings,” ASIC chair Joseph Longo said.

ASIC is also alleging that Nuix did not disclose its first half financial year 2021 ACV result from 18 January 2021 until 26 February 2021 when it published its half year results; did not provide a corrective disclosure regarding the announcements made to the ASX on 26 February and 8 March 2021, or announce a downgrade; or did not announce a downgrade to its Prospectus forecasts from 13 April 2021 after financial year 2021 ACV and statutory revenue had been reforecast. A downgrade was not announced until 21 April 2021.

“Nuix’s ACV result at the end of the first half showed that, far from growing rapidly at 18.5 per cent as the company had forecast for the full year, Nuix’s underlying business as measured by ACV had essentially shrunk by almost 4 per cent over the first half,” Longo added.

“It took the company over a month, until 26 February 2021, to disclose this material information to the market. Nuix had an obligation to promptly disclose this information.”

In addition to proceedings against Nuix, ASIC is also taking the company’s board to court over alleged breaches of their director’s duties. The directors in question are chair Jeffrey Bleich, Rodney Vawdrey, Susan Thomas, Daniel Phillips and Iain Lobban.

The agency alleged Nuix’s board did not take reasonable steps to prevent Nuix from making misleading statements and breaching its continuous disclosure obligations.

ASIC is seeking declarations, pecuniary penalties and disqualification orders from the Federal Court.

In an ASX announcement, Nuix said it has “fully cooperated” with ASIC during the course of its investigation into these matters.

“Nuix denies the allegations made against it and the allegations made against the director respondents and intends to defend the proceedings,” the announcement read. “Given the matter is before the Court, Nuix will not be providing commentary in relation to the progress of these proceedings.”

ASIC in February announced its investigation into Nuix related to prospectus forecasts ahead of its 2020 listing had completed without further action.

In November 2021, Nuix faced a class action lawsuit in relation to accusations of misleading investors about earnings guidance and causing them to suffer financial loss.