iSignthis fails to block ASX from revealing alleged breaches of listing rules

iSignthis fails to block ASX from revealing alleged breaches of listing rules

Payment identity verifier iSignthis (ASX: ISX) has failed in its bid to injunct the Australian Stock Exchange (ASX: ASX) from revealing alleged breaches of ASX listing rules in the Federal Court yesterday afternoon.

The company brought the lawsuit against the ASX to protect itself from "reputational damage" by hindering the ASX from releasing a 42-page report containing a number of allegations iSignthis claims are inaccurate.

ISX's position was not shared by Justice Jennifer Davies of the Federal Court, who said the public's interest in full transparency outweighed potential inaccuracies in the report.

"By publishing the statement of reasons and giving directions, ASX would be acting to protect the public interest in the operation of a fair, orderly and transparent market in relation to ISX's shares and the wider public interest, in my view, outweighs the potential consequences for ISX of the publication," Justice Davies said.

Additionally, if the document is discovered to contain erroneous or unwarranted conclusions, Davies says the ASX can retract or revise the report.

"The statement of reasons can, if necessary, be formally retracted, revised, qualified or explained," Justice Davies said.

iSignthis says it respects the decision made by the Federal Court and will not be appealing the ruling.

The ASX stands by its report released on Thursday afternoon which has been passed on to the corporate regulator.

"ASX remains of the view that ISX has committed a number of significant breaches of the Listing Rules and that ASX is obliged to refer those breaches to ASIC (Australian Securities and Investment Commission) for consideration of enforcement action," says the ASX.

As a result of ISX's failure to injunct the ASX each of the company's directors and officers who hold ordinary shares received on 27 December 2019 (totalling 250,000 shares) will be placing those shares in voluntary escrow for a period of 12 months from today.

The company anticipates it will be permitted to recommence trading of its securities on the ASX upon satisfying the directions of the stock exchange. ISX was first placed into voluntary suspension on 2 October 2019.

In the lead up to its suspension iSignthis was riding high, hitting a record share price of $1.66 on 11 September 2019 which crashed to a low of $0.99 the following day.

The speedy rise and dramatic crash of its share price caught the attention of the ASX, sparking the drama that has since unfolded.

ISX at the time blamed a report from Ownership Matters that raised concerns over the release of performance shares to top executives.

The company is currently embroiled in a class action that is homing in on similar issues raised by the ASX.

Led by Gadens partner Glenn McGowan QC, the firm will aim to determine whether unlawful conduct has occurred over allegations iSignthis failed to keep the market properly informed.

Since its troubles with the ASX began ISX has cosied up to the National Stock Exchange (NSX) and has been offering its expertise on same-day settlements on trades.

iSignthis' CEO John Karantzis has taken the company's relationship with the NSX to the next level, announcing in March that he would be leading the NSX.

"It was agreed with the board of the NSX that my appointment as interim CEO would allow the joint venture to be more efficient in delivering ClearPay," Karantzis said in a letter to shareholders.

"The intent is to also ensure that the new DvP platforms products, compliance, and operations are consistent with not only with the existing NSXA market licenced infrastructure but also designed to be operationally & regulatory compliant with other third-party financial market operators.

"My role at the NSX is principally strategic, but I will also be responsible and accountable for the organisation as interim CEO."

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