ASIC v ISX Hearing, page-3502

Understanding the Suspension of iSignthis (ISX) from the ASX

Background

iSignthis Ltd (ISX) was an ASX-listed company until its suspension in October 2019, ostensibly due to "share price volatility." This suspension has since been a subject of debate, with various stakeholders questioning the prolonged duration and the true reasons behind it. Later, the Australian Securities and Investments Commission (ASIC) took legal action against ISX for alleged disclosure breaches, adding another layer of complexity to the situation.

Suspension Due to Share Price Volatility

Initial Reason for Suspension
The ASX cited "share price volatility" as the reason for suspending ISX. While volatility is common among listed companies, indefinite suspension is unusual. This raises questions about whether the volatility was symptomatic of deeper issues within ISX or if there were other motives behind the ASX's decision.

Comparison with Other Companies
Many companies experience significant fluctuations in share price but are not suspended. This discrepancy suggests that ISX might have been subjected to different standards or scrutiny.

Legal Action by ASIC

Disclosure Breaches
ASIC's action against ISX centered on alleged breaches of disclosure obligations. Listed companies are required to provide timely and accurate information to the market, and breaches can lead to regulatory action.

Indefinite Suspension
Despite the legal proceedings, the indefinite suspension of ISX remains unusual. Typically, companies rectify disclosure issues and resume trading. The prolonged suspension implies that the issues were either particularly severe or that there were other contributing factors.

Court Case and Verdict

Judge's Verdict
The verdict in the court case has been a focal point of discussion. Some believe the judge did not delve deeply into whether the market was genuinely misled by ISX’s disclosures. The primary focus might have been on whether there was any potential for misleading information, regardless of the actual impact on investors.

Resource Allocation by ASIC
The extensive resources used by ASIC to pursue ISX have been questioned. Critics argue that many listed companies have compliance issues, yet few face such intense scrutiny. This raises the question of whether ISX was specifically targeted and why.

Analysis of ASIC’s Actions

Decision to Target ISX
The rationale behind ASIC's focused effort on ISX is unclear. Possible reasons could include the nature of ISX’s business, the perceived severity of the breaches, or other undisclosed factors. The concentration of resources on ISX, a relatively small player, contrasts with how other companies with similar issues are treated.

Budget and Resources
Evaluating ASIC’s budget and resource allocation, one might question whether the pursuit of ISX was justified. Was it a cost-effective use of resources, or was there an underlying motive that warranted such attention?

Outcome for ASIC
From a cost-benefit perspective, ASIC might consider this a success if the action serves as a deterrent or brings about a regulatory change. However, the long-term impact and the message it sends to the market and other listed companies need careful consideration.

Conclusion
The case of iSignthis (ISX) highlights significant issues within the regulatory environment of the ASX. The prolonged suspension, the court case for disclosure breaches, and the extensive use of ASIC’s resources suggest that there are underlying factors that have not been fully disclosed. The judge's verdict and the broader implications for ASIC's regulatory strategy remain points of contention. Understanding these dynamics is crucial for investors and market participants to navigate the complexities of compliance and regulatory oversight on the ASX.Understanding the Suspension of iSignthis (ISX) from the ASX