Former Nuix CFO Stephen Doyle. His penthouse was searched by Federal Police after ASIC obtained a travel ban on his brother Ross.Credit:
An affidavit filed with the court by ASIC in support of this action reveals that the brothers are accused of insider trading in Nuix shares during the period of January 22 to February 12,2021.
During this period,Stephen Doyle,50,is alleged to have passed on to his brother Nuix’s expected poor performance,which allegedly led Ross to sell 1.8 million Nuix shares which he held in an account of Black Hat,a company set up in Singapore on November 24,2020,just before the prospectus was released. Nuix provides the software platforms that regulators,police investigators and tax officials around the world use to run highly sensitive investigations.
Black Hat was established two weeks before Nuix’s stellar debut on the Australian stockmarket on December 4 with the shares offered at $5.31 each. By January 22 the shares had almost doubled in value,hitting a peak of $11.86.
But the half-yearly results on February 26 included a profit downgrade causing the share price to plummet by 32 per cent. Further downgrades followed.
Following a series of revelations byThe Sydney Morning Herald,The Age andThe Australian Financial Review,the Nuix share price has plunged to record lows,trading at less than half its issue price and slashing the value of the company by $3 billion since its January peak. Nuix has posted two earnings downgrades,terminated Stephen Doyle as CFO by mutual agreement and accepted the resignation of CEO Rod Vawdrey.
An affidavit filed by ASIC states that in the five weeks leading up to the company’s disastrous half year results,Ross Doyle sold 2 million shares in Nuix for $17.8 million,saving them more than $5.7 million if they had been sold on the day the half year financial results were released,which saw the shares fall a whopping 32 per cent.
Stephen Doyle is also accused of communicating inside information to his brother,who then allegedly acted on the information and proceeded to sell 200,000 Nuix shares in his own account on February 5.