ASIC Sues ASX Over Alleged ‘Misleading’ Software Upgrade Statements
The Australian corporate regulator has taken legal action against the country’s stock market operator, ASX, over allegations of misleading statements regarding a software upgrade delay. The Australian Securities and Investments Commission (ASIC) has filed a lawsuit seeking unspecified fines, claiming that ASX misled the market about the progress of a troubled software upgrade.
The lawsuit comes after ASX announced in a February 2022 trading update that it was on track to switch to a new blockchain-based clearing and settlement platform the following year. However, the project was ultimately shelved in November 2022 after years of delays and consultation with market participants.
ASIC chair Joe Longo described the software upgrade as a “collective failure” by the ASX board and senior executives, accusing the company of undermining financial market integrity and investor confidence. The lawsuit alleges that ASX was aware for months that the project was falling behind schedule, yet continued to provide misleading information to the public.
ASX CEO Helen Lofthouse, who took up the role in August 2022, stated that the company is reviewing ASIC’s allegations and recognizes the seriousness of the proceedings. Following the news of the lawsuit, ASX’s shares dropped as much as 4%.
The software upgrade, initially billed as one of the world’s most ambitious use cases of blockchain technology, has faced numerous setbacks since it was first announced in 2016. ASX now expects the project to be completed by 2029 under a new supplier, Tata Consultancy Services.
The lawsuit highlights the challenges faced by ASX in implementing the software upgrade and raises questions about the company’s governance and transparency. ASIC’s legal action against ASX underscores the importance of maintaining market integrity and investor confidence in the financial sector.
ASX is set to announce its annual profit on Friday, as the legal battle with ASIC continues to unfold. The outcome of the lawsuit could have significant implications for the future of the stock market operator and its relationship with regulators.