ASIC sues former Electro Optic Systems CEO on delayed revenue downgrade
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The news: Defence, space and communications manufacturer Electro Optic Systems (EOS) has admitted to failing to disclose a decline in 2022 annual revenue forecasts worth tens of millions and corporate regulator ASIC has sued former director and CEO Ben Greene.
ASIC and EOS will jointly apply to the Federal Court to impose a $4 million penalty on the company.
The numbers: Electro Optics Systems initially issued 2022 revenue guidance of $212.3 million between May and June 2022.
It later became aware by 25 July 2022 that it was likely to be $164 million, with a possible extra $27 million, but this was not disclosed until 14 weeks later until 31 October 2022.
The context: EOS admitted to continuous disclosure obligations for failing to disclose a materially significant decline in its 2022 annual revenue forecasts.
ASIC has also commenced civil penalty proceedings against Greene in the Federal Court for failing to adequately inform the EOS board of the material change, which ASIC alleges Greene knew or should have known about, and voted in favour of EOS board resolutions deferring the disclosure.
ASIC is seeking civil penalties, disqualification orders and declarations against Greene.
What they said: “Directors are required to exercise care and diligence in their roles, especially when they are made aware of material changes to financial information and in consideration of continuous disclosures to the market,” ASIC chair Joe Longo said.
“ASIC will allege that Dr Greene was aware of a material change in the company’s guidance but fell short in his consideration of these financials and EOS’s requirements to disclose them to the ASX.”
The sources: ASIC media release, ASIC media release
