Nuix share price dives 16% on new legal battle with former CEO

This tech company's former CEO is taking it back to court.

| More on:
A man holds his head in his hands, despairing at the bad result he's reading on his computer.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Nuix shares are crashing on Wednesday
  • Investors have been selling the tech company's shares after its former CEO appealed a recent court decision
  • Nuix is being sued for $61 million plus interest

The Nuix Ltd (ASX: NXL) share price has come under significant pressure on Wednesday.

At the time of writing, the investigative analytics and intelligence software provider's shares are down 16% to $1.07.

Why is the Nuix share price crashing?

Investors have been hitting the sell button on Wednesday after the company's former CEO, Edward Sheehy, appealed a recent court decision.

This relates to Sheehy's claims that he validly exercised options in January 2020 that would have entitled him to be issued with approximately 22.6 million shares. And with the former CEO claiming that he would have sold these shares long before Nuix shares had collapsed, he was seeking an award of damages of up to $169 million plus interest.

A month ago, the Nuix share price rocketed higher after the court dismissed his claims.

However, Nuix has now been notified that Sheehy has lodged a notice of appeal in respect of certain aspects of that decision.

The release notes that Sheehy contends that the primary Judge was incorrect in concluding that he was precluded from raising the matters in his claims by reason of the doctrine of Anshun estoppel and that share options held by Mr Sheehy could not be exercised following Nuix's IPO in December 2020.

What's next?

It is worth noting that Sheehy is not appealing the primary Judge's findings that Nuix had not engaged in any oppressive or unconscionable conduct.

In addition, Nuix notes that:

Mr Sheehy has also not appealed the primary judge's finding, that: even if he was to be successful in his claims that he was entitled to 22,663,650 shares in respect of his 453,273 options; and that he was entitled to exercise those options following the Nuix IPO.

As a result, his maximum potential damages claim would be approximately $61 million plus interest rather than the $169 million plus interest he originally claimed.

Nevertheless, Nuix continues to reject Sheehy's claims and will defend the appeal.

Motley Fool contributor James Mickleboro 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.

More on Technology Shares

a woman holds a facebook like thumbs up sign high above her head. She has a very happy smile on her face.
Technology Shares

Goldman Sachs says this ASX 200 tech stock is a top buy

Here's what the broker is saying about this quality stock.

Read more »

A young male investor wearing a white business shirt screams in frustration with his hands grasping his hair after ASX 200 shares fell rapidly today and appear to be heading into a stock market crash
Technology Shares

This ASX robotics stock just crashed 49% amid $1.1b blow

What is causing investors to hit the sell button today? Let's find out.

Read more »

A person with a round-mouthed expression clutches a device screen and looks shocked and surprised.
Earnings Results

Guess which ASX tech stock is rocketing 22% today

What is getting investors excited today? Let's see what is happening.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Broker Notes

Leading broker upgrades Pro Medicus shares to buy rating

Analysts at Bell Potter think this tech stock is a top buy right now.

Read more »

A woman holds her hand out under a graphic hologram image of a human brain with brightly lit segments and section points.
AI Stocks

$8,000 invested in Brainchip shares five months ago is now worth…

Brainchip shares have delivered some sizzling gains since September with plenty of volatility!

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Earnings Results

Pro Medicus share price storms higher on record-breaking results

Investors are cheering on this tech company's latest results.

Read more »

A young boy wearing a hat, sunnies and striped singlet looks fierce and flexes his arm in victory.
Small Cap Shares

The ASX small-cap stock trading at 'half of the earnings multiple of industry leaders'

A leading fund manager sees a lot of untapped value for this soaring ASX small-cap stock.

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Earnings Results

Guess which ASX All Ords stock just jumped 20%

Why are investors buying this tech stock on Wednesday? Let's find out.

Read more »