Phi Finney McDonald acts for the Lead Plaintiff and Group Members in a class action commenced in the Supreme Court of Victoria against Nuix Limited (Nuix), Macquarie Capital (Australia) Limited and Macquarie Group Limited (collectively, Macquarie) on behalf of shareholders who acquired Nuix shares in Nuix’s initial public offering (IPO) offer period of 26 November 2020 to 2 December 2020, and otherwise on the ASX at all times from 4 December 2020 to 29 June 2021 (inclusive) (the Claim Period).

The class action is funded by Woodsford Litigation Funding as a managed investment scheme named the Woodsford – Nuix – Litigation Funding Scheme (ARSN 655 927 521) (Scheme), which has been registered with ASIC.

Nuix is a company listed on the Australian Securities Exchange (ASX) that provides investigative analytics and intelligence software. It is headquartered in Sydney, Australia and maintains offices in a number of countries including in North America and the Asia Pacific region.

On 4 December 2020, Nuix listed on the ASX pursuant to its prospectus dated 18 November 2020 (the Prospectus) at an IPO price of $5.31. Its Prospectus contained extensive information about Nuix’s products, prospects, and historical and forecast financial performance, including earnings guidance for FY21.

On 26 February 2021, Nuix announced its HY21 results which included $85.3 million in statutory revenue, representing a 4% decrease from the previous year. However, Nuix insisted it was still on track to meet its full-year Prospectus earnings forecasts. The market responded strongly to the announcement and the company’s share price fell by approximately 32% by the close of trade.

On 21 April 2021, Nuix announced it had revised its forecast for FY21 and would not meet its Prospectus guidance. The company downgraded its forecasts as follows:

  1. pro forma revenue to $180-185 million (compared to $193.5 million forecast in the Prospectus); and
  2. annualised contract value (ACV) of $168-177 million (compared to $199.6 million forecast in the Prospectus).

Following the FY21 earnings downgrade, the company’s share price fell by approximately 15% by the close of trade.

On 17 May 2021, Nine newspapers revealed serious allegations about Nuix’s governance, ongoing underperformance issues before the IPO and the reliability of its financial reporting prior to listing on the ASX. The company’s share price fell by approximately 9.5% by the close of trade.

On 31 May 2021, Nuix disclosed that it would underperform even the revised revenue and ACV guidance it had provided on 21 April 2021, amounting to cumulative 8.3% and 15.6% shortfalls relative to the original FY21 guidance in its Prospectus. By the close of trade, the share price had fallen approximately 18%.

On the evening of 29 June 2021, Nine newspapers revealed that Nuix’s former CFO along with his brother and father were the subject of an ASIC criminal investigation into insider trading during the period 22 January 2021 to 12 February 2021, during which time the CFO is alleged to have passed on confidential information about Nuix’s poor performance to his brother. On the morning of 30 June 2021, Nuix issued an announcement confirming the investigation. By the close of trade that day, the share price had fallen approximately 13%.

Allegations

The proceeding alleges that:

  1. Nuix offered securities under a prospectus that contained material misstatements and omissions in breach of section 728 of the Corporations Act 2001 (Cth) (Corporations Act) including:
    a.  by providing FY21 Guidance that was materially misleading insofar as it lacked a reasonable basis and was unlikely to be met;
    b.  by failing to disclose that Nuix was experiencing significant technical, financial forecasting and corporate governance problems that compromised its capacity to meet its financial forecasts;
  2. Nuix engaged in misleading or deceptive conduct in breach of section 1041H of the Corporations Act during the period 4 December 2020 to 29 June 2021, and also made materially misleading statements in breach of section 1041E of that Act during the same time period;
  3. Nuix contravened its continuous disclosure obligations under section 674 of the Corporations Act from 4 December 2020 to 29 June 2021;
  4. Macquarie as joint lead manager of the IPO also contravened section 728 of the Corporations Act and was knowingly involved in Nuix’s contraventions of its continuous disclosure obligations and misleading and deceptive conduct; and
  5. The above conduct enabled Nuix shares to be offered at a higher IPO price than would have been otherwise reasonably possible and caused the shares to be traded on the ASX at an inflated price throughout the Claim Period.