At market close, the Nuix share price was down 5.07%, trading at $3.37.
The news comes days after the Australian Federal Police (AFP) confirmed it had begun a probe into the company and Castagna.
The AFP is investigating an options package Castagna supposedly acquired in 2005, although it hasn’t announced any further details.
The AFP’s inquiry follows a mountain of bad press from Nine Entertainment Co Holdings Ltd (ASX: NEC) publications The Sydney Morning Herald, The Age, and the Australian Financial Review.
As The Motley Fool Australia reported last Friday, the Nuix share price took a hit last week on the back of the claims made as a result of a joint investigation by the publications.
Nuix has now announced it has cancelled its consultancy agreement with Castagna. Let’s take a closer look.
No more Castagna
Today, the board of Nuix announced it has stepped further away from its controversial co-founder, former chair, and now former consultant.
In its announcement, the Nuix board stated:
Dr Castagna has been a significant part of Nuix’s success since its inception and we thank him for his long and important service to the company.
According to the 3 Nine Entertainment publications, Castagna was hired by Macquarie Group Ltd (ASX: MQG) in 1998. He is said to have later been asked to manage Nuix – of which Macquarie is a significant investor. Thus, Castagna is said to have been involved with Nuix since its early days.
Castagna was charged with money laundering and tax evasion in 2018 but was acquitted the following year.
Despite his acquittal, the publications have levelled a number of accusations at Castagna over the past fortnight.
Firstly, the publications claimed Castagna left the Nuix board the day its ASX float prospectus was released. This might have meant many Nuix investors wouldn’t have known of Castagna’s involvement with the company.
The publications also reported on the options package currently being investigated by the AFP.
They claim Nuix issued 300,000 options, priced at 1 cent each, to an entity controlled by Castagna in 2005.
The options were said to have been cashed out for $80 million at Nuix’s float.
According to the publications, aside from a record of their creation in 2005, there was no mention of the options within Nuix’s records until 2011.
The publications have reported the AFP is questioning whether the options were created in 2011 and backdated to 2005.
Nuix share price snapshot
Despite experiencing near-constant volatility, the Nuix share price has fallen just 1.44% since this time two weeks ago.
The company has not had an easy run on the ASX. Since its initial public offering (IPO) in early December – when it was hailed as the next market darling – the Nuix share price has fallen 57.24%.
The company has a market capitalisation of around $1.1 billion, with approximately 317 million shares outstanding.