“This has been a complete failure from ASIC and can never be repeated.”
Senator O’Neill also had a crack at another ASIC commissioner, Karen Chester, saying she was too focused on building her own career to take action on Nuix. Ms Chester was ASIC’s acting chairwoman at the time of the Nuix float.
Regulator declines to comment
“She was too busy dealing with the internal politics at ASIC, manoeuvring to become a permanent chair and building her own cliques within ASIC, rather than effectively prosecuting the job she was hired to do,” Senator O’Neill said.
ASIC declined to comment on Senator O’Neill’s allegations.
Nuix chief executive Rod Vawdrey resigned on Tuesday and chief financial officer Stephen Doyle was terminated “by mutual agreement”. These exits came after pressure from investors.
The company is also facing an exodus of senior staff and engineers, and a former staff member said the “brain drain” was the biggest challenge facing Nuix.
The departure of the senior executives follows weeks of revelations by The Australian Financial Review, The Age and The Sydney Morning Herald about the business, its poor culture and under-investment in its investigative analytics software products, a recent history of failing to meet sales forecasts and undisclosed risks in its prospectus.
After listing in December with a $5.31 issue price, the company’s shares soared as high as $11.86 in January, only to plunge as low as $2.60. They closed on Thursday at $2.76 per, down 77 per cent from their peak.
The share price drop was triggered by multiple earnings downgrades in recent months. The business had originally forecast $193.5 million revenue for the 2021 financial year in its prospectus. This has now been revised to between $182 million and $173 million. At the lower end, this would represent a fall in revenue from last year.
During the IPO roadshow, the company reportedly suggested its growth forecasts were conservative.
Before resigning as CEO, Mr Vawdrey had apologised to investors for the performance of the business and Nuix chairman Jeff Bleich admitted it did not have the internal governance structures in place for a listed company.
ASIC has issued Section 19 notices to Macquarie and Nuix executives as part of its compulsory information-gathering powers, as it investigates the Nuix float, including Macquarie’s role in it.
Nuix has engaged the services of boutique mergers and acquisitions house Highbury Partnership for independent financial and governance advice, and has pledged to beef up its board by bringing on more non-executive directors.
It formed a sub-committee of existing independent board members (former US ambassador to Australia Jeff Bleich, former head of Britain’s GCHQ signals intelligence agency, Sir Iain Lobban, and company director Sue Thomas) to work with Highbury to conduct a “review of recent matters”.
It also terminated its consulting agreement with co-founder Tony Castagna, who was once imprisoned for tax fraud, but was later acquitted after spending 14 months in jail.
Mr Castagna is now being investigated by the Australian Federal Police over possible breaches of the Corporations Act.