Former Nuix (ASX:NXL) executive accused of insider trading

The software giant is being rocked with news that ex-CFO Stephen Doyle, as well as his brother and father, are under investigation.

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asx company executive with multiple fingers all pointing at him

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Authorities are investigating insider trading allegations against Nuix Ltd (ASX: NXL)’s just-resigned chief financial officer Stephen Doyle and his family.

The Australian Securities and Investments Commission (ASIC) on Tuesday took legal action to prevent Doyle’s brother, Ross, from leaving the country to return to his residence in Switzerland.

The court papers show the brothers are accused of trading Nuix shares with knowledge of inside information over January and February this year, as The Sydney Morning Herald first reported.

Their father Ronald Doyle is also a subject of the investigation.

“We are genuinely disturbed by the allegations concerning Mr Doyle and will fully assist ASIC in getting to the bottom of that matter,” said Nuix chair Jeffrey Bleich.

The Motley Fool has contacted ASIC for comment.

The allegations against the Doyles

Nuix listed on the ASX in December with an initial public offer (IPO) price of $5.31. The hype about its growth prospects sent the share price rocketing up immediately, to a high of $11.86 in January.

As chief financial officer, Stephen Doyle would have allegedly known about the downgrade to the company’s financial performance that was to be revealed to the public in February.

But Stephen is accused of tipping off his brother in January, according to the court affidavit.

ASIC accuses Ross Doyle of then selling 1.8 million Nuix shares that were held by a Singapore company named Black Hat. Ross also sold 200,000 shares held under his own name.

When the company announced the downgrade in February, the Nuix share price plummeted 32%.

The corporate regulator alleges that both the brothers have a financial interest in Black Hat, and the insider trading would have saved them in excess of $5.7 million in losses.

Persons convicted of insider trading of shares face up to 15 years’ jail.

Nuix’s unhappy start as ASX-listed company

Nuix shares closed Tuesday at $2.54, which is more than 70% down on the year.

The pressures of financial downgrades and ASIC investigations forced the departure of Stephen Doyle and chief executive Rod Vawdrey just 2 weeks ago.

Just last week, Nuix’s Sydney office was raided by the Australian Federal Police, as was Stephen Doyle’s inner-city apartment.

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Motley Fool contributor Tony Yoo owns shares of Nuix Pty Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. 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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