Shares in ASX fall on ASIC legal action
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More news: Shares in ASX tumbled as the bourse operator faces legal action from the corporate regulator over alleged misleading statements linked to its Clearing House Electronic Subregister System (CHESS) replacement program.
ASX shares were down 3.8% to $63.37 by 11:25am AEST.
ASIC sues ASX over alleged misleading statements
The news: The ASX is facing legal action from the corporate regulator over alleged misleading statements linked to its Clearing House Electronic Subregister System (CHESS) replacement program.
In a Federal Court of Australia lawsuit announced on Wednesday, the Australian Securities and Investments Commission (ASIC) alleges statements made in ASX announcements on 10 February 2022 that the project remained "on-track for go-live" in April 2023 and was "progressing well" were misleading.
According to ASIC, at that time the project was not on schedule and ASX was unable to imply the project could meet future timetable goals.
The context: ASX announced six weeks after its alleged misleading statements that there was a strong likelihood of further delay to the project, and it eventually paused the CHESS replacement project in November 2022. ASX said then it would reassess all aspects of the project, which had derecognised approximately $245-255 million (pre-tax) in capitalised costs.
Initial delays to the project were flagged in late 2021, according to an ASIC timeline.
What they said: ASIC chair Joe Longo said, ‘"companies and market participants rely on what the ASX says about its operations to make their own decisions and investments. We expect the ASX to be a place to list and invest with confidence. When the ASX falls short, it has wide ranging consequences across the market".
Longo added that the "critical importance" of the CHESS replacement project "was all the more reason ASX needed to ensure it told the Australian public the truth about how the project was tracking and whether it would be completed on time".
"We allege that the true state of affairs as at 10 February 2022 was that the project was not 'progressing well', contrary to ASX’s announcement", Longo said.
ASX managing director and chief executive officer Helen Lofthouse said in response to the allegations that ASX recognises "the significance and serious nature of these proceedings. We cooperated fully with ASIC's investigation and are now carefully reviewing and considering the allegations."
"We play a critical role at the centre of Australia's financial markets, and continue to focus on supporting and delivering for customers. We are committed to taking ASX forward, and have made strong progress as an organisation over the past two years", she said.
The sources: ASIC media release, ASX announcement
