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NSX (ASX:NSX) drops 15%, in trading halt, after ASIC pursues director in court

NSX (ASX: NSX) share price has been put in a trading halt today, after ASIC started civil proceedings against its managing director.
The post NSX (ASX:NSX) drops 15%, in trading halt, after ASIC pursues director in court appeared first on The Motley Fool Australia. –

Share price plummet

NSX Ltd (ASX: NSX) was placed in a trading halt this afternoon, after shares in the stock exchange operator dropped 15% to 28 cents.

The NSX share price plummeted on news the Australian Securities and Investments Commission (ASIC) has launched civil proceedings in the Federal Court against iSignthis Ltd (ASX: ISX) and its managing director John Karantzis.

Mr Karantzis is also managing director of NSX.

A long list of allegations

ASIC alleges that iSignthis breached its continuous disclosure obligations by failing to disclose material information regarding 3 client contract agreements.

The customers – Corp Destination Pty Ltd, Fcorp Services Ltd and IMMO Servis Group – entered into agreements that provided one-off integration and set-up services for trading platforms.

ASIC alleges the revenues derived under the agreements resulted in iSignthis achieving performance milestones which caused the allocation of 336,666,667 performance shares – a substantial majority of which were allocated to the iSignthis directors, including to Mr Karantzis.

Specifically, ASIC alleges iSignthis failed to disclose in 2018 that it had recognised approximately $3 million in revenue that was one-off and non-recurring. It’s alleged that the revenue was derived from the integration agreements.

In an analyst briefing given by Mr Karantzis on 3 August 2018, ASIC alleges that Mr Karantzis stated iSignthis’ revenue for one-off fees accounted for less than 15% of the total revenue, when ASIC alleges it actually amounted to 75% of the total unaudited revenue for that period.

Due to these breaches, ASIC says that Mr Karantzis was involved in the failure of iSignthis to comply with its continuous disclosure obligations, and that Mr Karantzis contravened his directors’ duties under the Corporations Act.

A terminated relationship

ASIC’s proceedings also relate to iSignthis’ statements about the suspension and termination of its commercial relationship with global payments company Visa Inc (NYSE: V).

ASIC alleges that by 17 April 2020, iSignthis failed to disclose that Visa had terminated its relationship with iSignthis.

According to Visa, its decision to terminate was due to, “IsignThis not operating appropriate programs to manage Anti-Money Laundering and Risk”.

ASIC is currently seeking orders that Mr Karantzis be disqualified from managing corporations.

NSX and ISignthis share prices

Prior to today, the NSX share price has been enjoying a good year, rising by more than 100%. It is the owner and operator of two stock exchanges in Australia – the National Stock Exchange of Australia Ltd, and IR Plus Securities Exchange Limited.

The NSX business has no relevance or association with the iSignthis’ fintech business. However, it has been caught in the crossfire today as its managing director Mr Karantzis is also the chief executive of Isignthis.

The shares of iSignthis have been suspended by the ASX since October.

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Motley Fool contributor Eddy Sunarto 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 Bruce Jackson.

The post NSX (ASX:NSX) drops 15%, in trading halt, after ASIC pursues director in court appeared first on The Motley Fool Australia.

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