ASX company bosses punished for getting rich from misleading investors

Court hands down record penalties against the software provider that left investors empty-handed.

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Software maker Getswift has copped "the largest ever penalty" against a company for breaching continuous disclosure laws.

The Federal Court has handed down an unprecedented fine of $15 million on delivery management app provider Getswift, which used to be listed on the ASX under ticker code GSW.

Getswift's former executive chair Bane Hunter copped a penalty of $2 million and barred from managing corporations for 15 years. 

Former director, chief executive and retired AFL player Joel Macdonald copped a $1 million fine and was banned from managing companies for 12 years.

Another former director, Brett Eagle, was fined $75,000 and disqualified from managing corporations for two years.

According to the court, Getswift became an ASX darling as a result of "an unlawful public-relations-driven approach to corporate disclosure" deliberately executed by those running the company.

'Laser-like focus on making money for himself and Mr Macdonald'

After listing for 20 cents on the ASX in December 2016, one year later Getswift shares were trading around the $3.70 mark.

While investors were popping champagne corks then, the series of customer signings announced to the market that inflated the stock price were later found to be gross exaggerations at best.

By March 2019, Getswift shares had deflated to 18 cents after its tactics unravelled.

The business was delisted from the ASX in January 2021 to flee to the Canadian NEO exchange, but the entire operation finally went into liquidation last July.

Federal Court justice Michael Lee was stinging in his criticism of those in charge of the company.

He said Hunter "had a laser-like focus on making money for himself and Mr Macdonald", and if that happened to coincide with breaking stock market laws or exposing Getswift to liabilities, it was "of little concern to him".

Macdonald was also solely concerned with making money for himself and had "little understanding or regard for his legal obligations as a director".

After a settlement last month, former investors will be fortunate to receive 1 cent for each dollar they put in.

Justice Lee noted in his decision that there is "no evidence of contrition or remorse" by Hunter or Macdonald, who have fled overseas.

The three directors and the company were also ordered to pay the legal costs of the Australian Securities and Investments Commission, which brought the case to the court.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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