ASIC Sues ASX for Misleading Statements

Australia's corporate regulator, the Australian Securities and Investments Commission (ASIC), has initiated civil proceedings against ASX Limited, the country's largest market operator, for allegedly making misleading statements regarding its CHESS replacement project. The lawsuit was filed in the Federal Court on Tuesday, focusing on ASX's announcements from February 10, 2022, which claimed the project was "on-track for go-live" in April 2023 and "progressing well." ASIC contends these statements were deceptive, as the project was not on schedule, and ASX lacked a reasonable basis to suggest it would meet future milestones. The CHESS replacement project, crucial for managing shareholdings and transaction settlements, was put on hold in November 2022. ASIC Chair Joe Longo emphasized the importance of accurate communication from ASX, stating that companies and market participants depend on the integrity of ASX's operations for their investment decisions. He described the misleading statements as a "collective failure" by ASX's board and senior executives, highlighting the potential wide-ranging consequences for the market when ASX fails to meet its obligations. In response, ASX managing director and CEO Helen Lofthouse acknowledged the seriousness of the allegations and stated that the organization has made "strong progress" since the misleading statements were issued. She confirmed ASX's full cooperation with ASIC's investigation and indicated that the company is currently reviewing the allegations. ASX is scheduled to release its FY24 results on Friday, while ASIC is still determining the potential penalties for ASX's alleged violations.