Nuix shares are dropping again. Could ongoing ASIC investigations be to blame?
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The Nuix Ltd (ASX: NXL) share price is continuing its downward trend, despite the company having managed to stay relatively quiet.
At the time of writing, the software company’s shares are swapping hands for $2.47, down from $2.67 a week ago. That represents a 7.49% decline in value.
However, Nuix is no stranger to volatility and it’s also got a lot on its plate right now. Let’s take a look what Nuix has been up to lately.
What’s going on with the Nuix share price?
Perhaps ongoing and unfolding investigations into Nuix, its advisors, and its former directors are to blame for its share price flopping.
ASIC going after former CFO
Nuix’s former chief financial officer Stephen Doyle is being investigated by the Australian Securities and Investments Commission (ASIC).
ASIC believes Doyle and his brother engaged in insider trading in January and February of 2021.
Doyle is accused of warning his brother of Nuix’s February downgrade, giving his brother enough time to offload around 2 million shares.
The tip-off is said to have saved both brothers from losing $5.7 million when the Nuix share price tumbled 32% on the back of the downgrade.
Macquarie and Nuix subjects of ASIC investigation
Macquarie backed Nuix in its initial public offering (IPO) back in December 2020. The float reportedly made Macquarie’s pockets $524 million heavier.
Since then, after numerous profit downgrades, the Nuix share price has plummeted 68%.
A law firm reportedly told ASIC that Nuix’s prospectus was off 3 times. However, the watchdog failed to find anything suspicious about the company’s financial forecasting prior to it floating on the ASX.
ALP Senator Deborah O’Neill addressed ASIC’s alleged failings in Parliament last month, saying:
The failure of ASIC to appropriately regulate Nuix’s IPO has had catastrophic consequences for all investors except for Macquarie Bank, Nuix’s and Macquarie’s executives and offshore banks in tax-friendly Vanuatu and Switzerland.
Nuix share price snapshot
Despite being touted as the biggest IPO of 2020, the Nuix share price has been a major disappointment.
It has dropped around 70% since it floated roughly 7 and a half months ago.
The company has a market capitalisation of around $796 million, with approximately 317 million shares outstanding.
Should you invest $1,000 in Nuix right now?
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.