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ASIC confirms Nuix IPO investigation as CEO and CFO depart

The Australian Securities and Investments Commission confirmed on Friday (18 June) that it is reviewing the disastrous Nuix $1.7bn IPO, following a week that saw chief financial officer Stephen Doyle terminated and CEO Rod Vawdrey announce his retirement from the beleaguered company.

Appearing before the Australian parliamentary joint committee, ASIC chairman Joe Longo said that the regulatory body was very aware of market concerns over the IPO – which has subsequently seen its value crash – and is conducting a review.

Nuix lodged a prospectus with ASIC on 18 November but between 23 and 26 November, ASIC received three complaint letters from a law firm on behalf of an anonymous client. ASIC reviewed the prospectus and decided that it was not misleading or deceptive and did not contain material omissions. You can read Longo’s opening statement here.

But it was an investigation by The Sydney Morning Herald, The Age and The Australian Financial Review that raised questions over Nuix’ governance and the quality of its financial accounts going back years.

Nuix has said in a statement that it has in place robust processes to measure forward indicators of performance, and that it is committed to the highest standards of corporate governance, commenting: “Financial forecasts at the time of its IPO and subsequent updates have been thoroughly explained in the company’s market disclosures, including Nuix’ IPO prospectus..” adding: “The prospectus was the subject of a thorough due diligence process involving leading law firms, internationally recognised accounting firms, and top tier financial and investment banking advisers.”

However, Nuix announced on 15 June that Doyle is being terminated by mutual agreement. The Australian software company has appointed Chad Barton as interim chief financial officer, to take effect from today (21 June). Barton was most recently the CFO of The Star Entertainment Group. The company has initiated an executive search for Doyle’s permanent replacement.

The termination was swiftly followed by the announcement that CEO Rod Vawdrey has given notice that he is to retire. He will continue in the role while an international search is conducted for his replacement. Chairman Jeff Bleich said: “Rod’s decision reflects his deep commitment to Nuix and love for the company. Rod has agreed to remain at least through the announcement of end of year results, and throughout the process required to find the right replacement to ensure the smoothest possible transition.”

Nuix has also ended its consultancy arrangement with former chairman Dr Tony Castagna, who local papers report is being investigated by the Australian Federal Police as to whether he complied with the Corporations Act. Dr Castagna received $80m when Nuix listed and the investigation by the SMH, The Age and AFR alleges gaps in the company’s records surrounding his stock options.

Caroline.hill@legalitlexicon.com