The Nuix Ltd (ASX: NXL) share price is falling after a politician told Parliament the Australian Security and Investment Commission (ASIC) failed to regulate Nuix's initial public offering (IPO).
At the time of writing, the Nuix share price is down 3.99%. Shares in the software company are swapping hands for $2.65.
Labor Senator for New South Wales Deborah O'Neill used parliamentary privilege to accuse ASIC regulators of conflicts of interest yesterday.
Let's take a closer look.
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ASIC blasted on IPO
Nuix floated on the ASX at an IPO price of $5.31 in December 2020. At the time, the company was sold as a future ASX success story.
Nuix has since released 2 revenue downgrades, faced intense criticism from media, and an Australian Federal Police investigation. Most recently, both Nuix's chief executive officer and chief financial officer have exited the company.
According to O'Neill, Aperion Law sent 3 letters to ASIC prior to Nuix's float, each noting its concerns of the company's financial forecasts. None of the letters received a response.
O'Neill said ASIC's alleged failure left "thousands of investors devastated yet made many in a very exclusive club vastly rich". She said:
Mere months after the IPO, the share price has plummeted… wiping almost $3 billion off the values of shares bought by everyday investors who bought them at the IPO or subsequently.
According to O'Neill, Macquarie Group Ltd (ASX: MQG) earned more than $565 million in Nuix's float and $24 million in fees. O'Neill said:
The failure of ASIC to appropriately regulate Nuix's IPO has had catastrophic consequences for all investors except for Macquarie Bank, Nuix's and Macquarie's executives and offshore banks in tax-friendly Vanuatu and Switzerland…
[Macquarie's' stake in Nuix] probably accounted for around 50% of profits of Macquarie Capital that financial year. [Nuix's float] was a billion-dollar payday for Macquarie and helped deliver Macquarie's CEO a $20 million bonus for the 2021 financial year.
According to O'Neill, former Macquarie executive Cathie Armour was one of the ASIC commissioners in charge of Nuix's float. O'Neill claimed Armour was particularly negligent in Nuix's IPO, saying:
What did Commissioner Armour not investigate? Why did she not investigate? What contact did she have from Macquarie in regard to this IPO that led her to such a complete abdication of responsibility in this regard? Did she even read the Nuix prospectus? Did any of her fellow commissioners at ASIC read and act on concerns validly raised… by Aperion?..
This sorry episode has been a complete failure by ASIC. It must never be repeated.
Nuix share price snapshot
Since Nuix's IPO, its share price has fallen 66%.
The company has a market capitalisation of around $875 million, with approximately 317 million shares outstanding.
