Australian Financial Regulator Sues ASX Over ‘Misleading’ 2022 Announcements

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The Australian Securities and Investments Commission (ASIC) is seeking legal redress against ASX Limited, the country’s biggest market operator. ASX allegedly made misleading statements about a blockchain project it planned as a replacement for its old system of managing shareholdings and settlement, according to the ASIC.

In a recent statement, the securities regulator pointed out many inconsistencies with some of ASX’s February 2022 announcements about the supposed project. The commission particularly cited a part where ASX claimed that it had made enough progress that assured that the blockchain project was well on track for an April 2023 debut. A part statement from the regulator reads:

“ASIC alleges those representations were misleading and deceptive because, at the time of the announcements, the project was not tracking to plan, and ASX did not have any reasonable basis to imply the project was on track to meet future milestones.”

Meanwhile, ASX initially planned for the project to replace the Clearing House Electronic Subregister System (CHESS). However, all efforts towards the ambition prematurely ended in November 2022. That was after Accenture reviewed the system’s design and found it lacking in many areas.

Notably, though, ASX never announced that it was completely shutting down the project. Rather, the exchange said it was pausing the project and wrote costs of 250 million Australian dollars at the time.

Whatever the case might be, the ASIC believes that the inability of the project to stay true to its words has had wider impacts on the Australian financial markets. Joe Longo, the Commission’s chair, issued a part statement to this regard, saying:

“Companies and market participants rely on what the ASX says about its operations to make their own decisions and investments.”

ASX Responds

Interestingly, ASX has now issued an official response to ASIC’s lawsuit. The firm confirmed that the regulator is seeking declarations, potential fines, and adverse publicity order and costs against it. The project also confirmed that it will continue to cooperate with ASIC’s investigations as it has been doing. However, for now, ASX is currently looking for ways to carefully review the allegations that the regulator has levied against it.

As of press time, ASX’s stock price closed down 3.67% at 63.45 Australian dollars.

Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence before making any trading or investment decisions.