Macquarie and Nuix face ASIC investigation: report

More bad news for the tech company, its major backer and shareholders as the corporate watchdog probes the IPO.

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Under-fire technology firm Nuix Ltd (ASX: NXL) and its major shareholder Macquarie Group Ltd (ASX: MQG) are reportedly facing an investigation by the corporate watchdog.

The Australian Securities and Investments Commission (ASIC), according to the Sydney Morning Herald, has notified both companies to not destroy documents going back to 2018.

The regulator’s probe will reportedly explore accusations that financial forecasts were inflated in the prospectus that led to Nuix’s listing in December.

The newspaper reported that “several executives” involved in the initial public offering (IPO) have been served section 19 notices, which are precursors to an ASIC investigation. Not complying with section 19 exposes subjects to jail sentences.

Nuix declined to comment to The Motley Fool on the investigation.

But a spokesperson did say the company “understands and appreciates” issues raised by investors about missed prospectus forecasts.

“The CEO, chair, and other senior leaders and board members acknowledge that recent financial performance, while still strong, has not been where we thought it would be.”

Nuix still doesn’t have an investor relations head. The spokesperson told The Motley Fool that one would be appointed soon.

ASIC declined to comment to The Motley Fool, while Macquarie did not respond.

Year of discontent for Nuix and all involved

With the possible exception of former chair and founder Tony Castagna, Nuix’s fortunes this year have presented a headache for investors, Macquarie, the company itself and regulators.

Repeated downgrades to the initial prospectus forecasts in the first few months of its ASX life has seen the Nuix share price plummet from a high of $11.86 to now $2.75. 

The current worth is about half the IPO price.

As well as the financial performance, last month the Federal Police reportedly started an investigation into irregular paperwork involving Castagna’s share options. Those options allowed Castagna to turn $3,000 he put in in 2005 into $80 million upon the float.

Although Macquarie still holds 30.1% of the company, it has also suffered reputational damage from the saga.

At least two law firms are currently exploring class-action lawsuits on behalf of aggrieved IPO investors. The Motley Fool has contacted one firm but it did not respond.

Nuix’s listing was highly anticipated. The company provides data analytics software that calls large government and law enforcement agencies among its clients. 

The flagship product is the Nuix Engine, an unstructured data processor. The software helped journalists plough through 11.5 million documents during the Panama Papers investigation in 2016.

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Tony Yoo owns shares of Macquarie Group Limited and Nuix Pty Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended Nuix Pty Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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