Our hands are tied on listings: ASIC

By Sarah Kendell
 — 1 minute read

Parliamentarians have taken the corporate watchdog to task over its apparently soft vetting procedures around prospective IPOs, after a Labor senator unveiled evidence of ASIC officials taking a rushed approach to a tech group currently under investigation after a multibillion-dollar failed ASX listing.

Appearing at the parliamentary joint committee on corporations and financial services last week, new ASIC chair Joe Longo said the regulator’s role was limited to reviewing company disclosures in a prospectus prior to IPO, and attempted to distance the corporate watchdog from the later failures of Macquarie-backed tech group Nuix.

The firm listed on the ASX in December last year and saw a quick collapse in its share price after two earnings downgrades, with investors losing out on almost $3 billion from the peak of its value in January. 


Nuix is now the subject of an ASIC investigation into whether its earnings forecasts were overstated in its initial prospectus, as well as a Federal Police probe into possible breaches of the Corporations Act by its former chair, Tony Castagna.

“Nuix lodged a prospectus with ASIC on 18 November, and between 23 and 26 November we received three complaint letters [about Nuix] from a law firm on behalf of an anonymous client,” Mr Longo told the committee. 

“We questioned the company in relation to a number of areas of revenue recognition, but it did not appear the prospectus contained any omissions.”

Committee member and Labor senator Deborah O'Neill, who slammed ASIC’s handling of complaints against Nuix in Parliament last week and suggested commissioner Cathie Armour’s previous employment at Macquarie may have presented a conflict, revealed she had obtained email communications that appeared to confirm the regulator had taken a rushed approach to reviewing the group’s IPO.

Ms O'Neill said she was concerned at “the shortness of time” ASIC took to look into complaints around Nuix’s disclosures to investors ahead of its IPO, and the fact that tip-offs received around the troubled company were “assigned to a graduate” to investigate.

“The work was done by a team which included senior managers and executive leaders and did include some assistance from a graduate, but the team did the relevant work and judgement about the prospectus and what steps should be taken were taken at the appropriate level,” Mr Longo said.

“The way the regime works under the Corporations Act, we have limited time to work through any issues brought to our attention. The regime we have is intended to be a system that encourages companies to go to market quickly – the trade-off is issuers take responsibility for the contents of the prospectus and investors understand that this is the regime we operate under.”

Mr Longo said he did not have concerns about the processes followed by the regulator before Nuix’s IPO and that ASIC was limited in what it could do to protect investors from what Senator O'Neill called an “undercooked” listing by the tech firm.

“We considered the complaint and requested information from the company in accordance with usual procedures,” he said. 

“ASIC doesn’t consider the merits of an offer when reviewing a prospectus. Our reviews are limited to disclosure – we may intervene if a document makes misleading statements or omits the information required to make an informed decision.”

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Our hands are tied on listings: ASIC
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