Now that the ASX defence is on the Comm Court portal, it has set me to wondering what might bein it regarding arguments against a charge of false and misleading statements, paying the huge cost claim and/or to further discredit ISX.
This thread is to discuss the top 10 arguments that I believe will be used where 1 signifies what I believe it is the most likely argument to be used and the most important for a good ISX counter-argument and 10 signifies that I deem it to be the least likely/least important of the 10.
#1:Ibelieve ASX will claim they have absolute discretion to do whatever they wish regarding the listing rules as an argument on why it is legal for them to have suspended ISX, demand ISX answer every question ASX asks – even when the answer is “business in confidence”-, manage the information in any way ASX pleases, to release any information it receives to the market so that the market will be, as ASX likes to say, “fair, orderly and transparent” (Ha!) and/or including (allegedly) releasing information to the press from time to time.
In the post “Is the manner with which ASX is treating ISX really how Parliament envisioned when creating the listing rules - See 26/05/20 16:05Post #: 44846011”, I state that it is a reasonable assumption that along with the ASX’s absolute discretion, that Parliament expected the operator to have a high level of sensitivity for the rights and reputation of the listed entity and its shareholders when carrying out activities under listing rules especially with regard to publishing documents that contain suppositions alleging an entity has broken a listing rule before this infraction has been proven.
Guidance Note 8 (see: https://www.asx.com.au/documents/rules/gn08_continuous_disclosure.pdf)points out that Listing Rule 3.1A – the exceptions to immediate disclosure- includes “5.5 Matters of supposition or that are insufficiently definite to warrant disclosure”.Additionally and again, Guidance Note 8 states in 4.3, the need to assess information in context: “In assessing whether or not information is market sensitive and therefore needs to be disclosed under Listing Rule 3.1, the information needs to be looked at in context, rather than in isolation, against the backdrop of:
·Thecircumstances affecting the entity at the time;
·Anyexternal information that is publicly available at the time; and
·Anyprevious information the entity has provided to the market (eg, in a prospectus or PDS, under its continuous or periodic disclosure obligations or by way of earnings guidance).”
I am trusting that ISX/HWLEwill have a much more thorough and convincing argument as a response to this because if the manner in which ASX has used its “absolute discretion” regarding ISX is accepted by the court, then what power does a listed company have?
#2.I believeASX will argue that their Statement of Reasons (SOR) is not false and misleading because ASX has never said that the statements in this report “ARE TRUE” but only that ASX “BELIEVE’S THEY MAY BE TRUE”. In the post “Should ISX supporters be prepared for a potential loss… - see 26/07/20 13:19Post #: 46071913”, I argue, “ISX appears focussed, as I admit I have been, on the fact that the ASX Statement of Reasons (SOR) is rife with assumptions, lack of conclusions, the inclusion of irrelevant facts that are plainly just not true and that this is an indication of false and misleading conduct.What if, as has only just occurred to me, it is ASX’s intention to argue that the document was never intended to inform the market of what is true, but what ASX believes could be true – and, because ASX is still just not sure, this justifies the continued suspension.”
@vjojojose1 argues in Post #: 46072546, “ that section 1041H that ISX is using to claim damages accommodates a broader definition, eg. ‘likely to mislead or deceive’ ” He goes on to say that in his opinion, “ ISX needs to prove ASX's conduct/act (releasing the SOR) led to the cancellation or termination of contracts/businesses ANDthat ISX was not provided the opportunity to refute those claims/assertions.”
I make note of the extent of the effort that ASX went to use these words in the SOR and ask the question in the post, “Will ASX’s choice of words in its SOR protect it from being found guilty of false and misleading conduct? See 26/06/20 13:01 Post #: 45470906”.The analysis shows that ASX qualified its words on almost every major point.@vjojojos1’s arguments apply for this post as well and I am trusting that he is correct.
#3:Ibelieve ASX will argue, “Your honour, it is not our fault! It is ISX’s fault if the report is false and misleading. When ISX answers were given to the 4 query letters, ISX didn’t provide us with the answers that ISX is providing to the court. How then could we have known, your honour? “
This angle has been a niggling thought of mine of late - that ASX will attempt to place the blame onISX and argue that the reason ASX still believed ISX guilty of various sins and omissions, when the SOR was written, was because it was ISX who hadn’t given ASXenough information for ASX to form the opinion that ASX’s accusations were not correct and will maintain that ASX believed it had all the facts and therefore did not fraudulently or negligently cause loss or damage. I believe ASX might use this argument to discredit all new information/arguments that ISX submits.
For example, ASX may use this to argue in ASX’s defence that when ASX stated in their SOR that “shareholders of Otis Energy could never have envisioned that ISX could create revenue solelyfor the purpose of receiving performance shares”, that ASX wouldn’t have statedthis if ASX had been told by ISX about the independent expert report in 2014that advised Otis Energy (OE) shareholders that the terms of the performance sharesmeant that the performance shares could be earned at the expense of profit,that OE shareholders voted on the terms 99%, and that ASX had approved theseterms.
My reply to this wouldbe to point out that it would be reasonable for ISX to assume that ASX wouldhave thoroughly read all announcements as part of their investigation andtherefore ISX wouldn’t need to tell them – especially when guidance note 8states that “ASX needs to look at all information in context, rather than inisolation, against the backdrop of:
·Thecircumstances affecting the entity at the time;
·Anyexternal information that is publicly available at the time; and
·Anyprevious information the entity has provided to the market (eg, in a prospectusor PDS, under its continuous or periodic disclosure obligations or by way ofearnings guidance).”
After all, it shouldn’thave been that difficult.If I could find this gem in the historical documents, surely ASX should have been able to.See “OE Shareholders gave explicit approval in 2014 for the process for ISX earning performance shares”, 16/05/20 13:23Post #: 44655625and “ Open letter to ASX –Enough is enough!”,16/06/2016:10 Post #: 45254976.
Also see related post: How does ASX rationalise its continued suspension of ISX for reasons of achieving performance shares?” 24/05/2011:58 Post #: 44799787
#4:Ibelieve ASX will argue that it is rational for ASX to believe that ISX is corrupt since ISX has had some customers who turned out to be frauds and corrupt well into the future.Although this is plainly an idiot’s argument, ASX will not be able to itself.I am hoping if this argument exists, that the ISX QC will say “You see your honour, this is evidence of the attempt to smear ISX that ISX has had to contend with.Either ASX thinks you are stupid, your honour (and we are sure you are not), or ASX just cannot resist the opportunity to attempt to put just one more stake into ISX”.It is unlikely he would say this, however, since the ISX QC has shown himself to be quite a gentleman.I want him to take his gloves off.
ASX will use as evidenceall the customers that are in 2019/2020 news articles or ASIC announcements asproof – years after they ceased to be customers of ISX.In the post “Is it rational for ISX to mistrust ASX and be reluctant to provide the information it currently demands?”,19/06/20 13:14 Post #: 45325263, I pointed out that in the SOR, ASX placed a clear focus on the “quality” of some of the parties with whom ISX did business in 2017 and 2018 with insinuations that ISX shouldhave known they were corrupt.There is a serious question as to why ASX chose to reference in the SOR, articles in years that were well after the years ISX had contracts with these customers in 2017 and 2018.Here are a few of the references ASX used in their SOR:
1.The Federal Court judgment ASIC v AGM Markets Pty Ltd [2018] - this case was decided in February 27, 2020.In this paragraph, ASX says “it seems reasonable to infer this could be evidence of a link between Corp Destination and OT Markets.Note:ISX was not named anywhere in the court case against AGM Markets or in its decision.
2.Infers in note 136 that the character of an entity’s customers can go to the quality of the revenue being generated and proceeds to reference still another 2020 judgment ASIC v One Tech Media Ltd – which, to my knowledge, had nothing to do with ISX.
3.FCorp – ASX references ASIC’swebsite advisory page (last updated on 3June 2019)
4.12 December 2019- Germany’s Federal Financial Supervisory Authority issued a notice ordering FCorp to cease cross-border proprietary trading
5.20 December 2019, TheFinancial Conduct Authority (UK) published a warning notice….
Additionally, ISX’sbusiness model states that if a business is a licenced entity in a jurisdictionthen ISX will take the entity on as a customer and continue to monitor theirfinancial transactions for AML/ATF and child exploitation infractions.In the post “Argument to support that ISX SHOULD have corrupt customers”,22/11/19 13:04Post #: 41578171, I state the underlyingfacts that:
1.ISX deploys verificationmethods known as "know your customer "(KYC) strong customer authenticationand which now includes "know your customer's customer" (KYCC). This technology looks at records that are transacting through theircustomers' accounts to determine if any are transactions for money laundering,child exploitation, terrorist funding.
2.ISX uses ASIC, APRA, USSecurities & Exchange Commission, UK Companies House, Cyprus Registrar ofCompanies etc. to determine if a company is found to be corrupt, suspected ofcorruption and/or if they are an appropriately licensed Financial ServicesLicenced holder.
3.ISX is a "REGTECH",but is not a regulator in the same manner as is ASIC and APRA.
4.ISX does not have a tradingplatform; it interfaces, in order to monitor transactions, with various tradingplatforms licenced by various other third-party vendors.
Also read the related post: “ISX Letter to Shareholders regarding ASIC’s winagainst unlicensed binary operators”, 05/02/20 19:34 Post #: 42766325
#5:I believe ASX will attempt to discredit ISX because a subsidiary of VISA labeled ISX’s VISA suspension, “AML”.Does anyone know what this means?Does it mean that some transactions were missed? I have argued that it would be a naïve person to think that any algorithm would pick up all AML transactions and that the real issue is whether a company knowingly allows AML/CTF and child exploitation transactions to proceed - such as a few of our Australian Banks did.Will ASX have evidence of what really happened, or is ASX’s this only intended to discredit ASX. See post:“Visa breach of ISX customer data”,16/08/2022:53Post #: 46579651
#6:I believe ASX will argue as they did in the interlocutory proceedings and use the false and misleading media articles as proof of why ASX did not damage ISX’s reputation, but that the information was already “out there”.In the post “Does an argument exist that ASX used “dirty tactics” in open courtroom to further damage ISXs reputation?,09/05/20 10:28 Post #: 44525177, I point out that “Ms. Button took the opportunity to disclose information that had no substancein fact, because it was already in the public view and therefore was notblocked. She said (with apparent glee - my interpretation):
“Can I note for your Honour,for example, articles at page 591 and 594 are AFR – Australian Financial Review– articles that reference unexplained transactions with suspicious activity alarmsbeing raised on 26 times at a collapsed Danish bank.”
A relevant question needsto be asked regarding why ASX chose to have Ms. Dutton state this unprovenaccusation in open court when ISX has already stated that ISX is not aware ofthese activity alarms and that ISX has never been notified about any suspiciousactivity alarms. Additionally, I could not find this issue mentioned in the ASXSOR. Therefore, a serious question exists as to whether ASX investigated and found no evidence, but chose to bring it up in open court anyway and again, for what purpose? And again, does ASX think the judge is too stupid to see right through this?I do not think so!
We all know that there hasbeen a continuous string of incorrect and unsubstantiated news reports.See as a few examples:
·“Objection to AFR reporting on ISX” 29/10/1910:06Post #: 41115356
·“Just Askin’.How useful do you think this article is ‘AFR questions with Weimin Xie’ ”?14/11/19 15:55 Post #: 41427713
·“Another tabloid article by the AFR on ISX”, 14/12/19 13:34Post #: 41968665
#7:Ibelieve ASX will attempt to explain away their refusal to allow ISX to use the ASX MAP for the ISX official response to the arguments ASX made in their SOR because ISX eventually became frustrated with the refusal and put it up on ISX’s own platform, and pro-ISX posters put the response on to the Hot Copper platform. Therefore, ASX will maintain, they didn’t need to allow it – ISX has its own methods to get information out there.But then the question exists: Why do we need the MAP at all?!
Related posts:
·Will JudgeDavies be sufficiently annoyed at ASX, 24/06/20 14:12 Post #: 45420368
·Is ASXusing bully tactics to effectively muzzle submissions ISX wishes to make to the market in its defense?,08/05/20 11:37 Post #: 44509281
#8:I believe ASX will attempt to justify their claim by making assumptions about what a “reasonable person would expect” regarding the fact that ISX shares went up 1 cent after announcing that the 3rd tranche of performance shares was earned.I would ask, what kind of assumption can ASX make almost 2 years after the event.All I know is that I, a shareholder from 2015, am a “reasonable person” and I did not buy more shares or think that the shares would go increase in value just because they earned the 2nd or 3rd milestone, nor did I think the share's value would decrease.The market basically knew this information already and I believe the .01 cent change in both examples was coincidental and incidental.
#9:Ibelieve ASX will attempt to discredit the UTZ independent expert report.I comment on this, plus the additional information on VISA in the post “Update on the detail of the Independent Expert Report, 18/08/2007:19Post #: 46608765where I state, ”Ihave read the detail of the Independent Expert Report and have found nothing 'untoward' within the detail.The detail perfectly aligns with the summary that stated simply that based on UTZ review, no contracts were identified that had not been disclosed…”
#10:Ibelieve ASX will attempt to use posts submitted by pro-ISX posters to claim ASX need to win because ASX’s reputation is being ruined because we have stated that ASX has a conflict of interest.ASX will not explain to the court that in fact, ASX DOES have a conflict of interest.Related posts:
·“We holdersneed to keep our message simple”,13/12/19 12:35 Post #: 41953436
·“Are ASX'sPowers too broad considering its conflict of interest with ISX”, 06/05/20 16:45 Post #: 44469589
·ISX vsASX:Am I missing something?, 01/08/2015:23Post #: 46237644
·A validquestion exists:What might ASX’s motive be for ISX’s continued suspension, 09/07/20 11:23 Post #: 45745957
·Should ASXshareholders be concerned if ASX is currently abusing or being seen to abuseits powers? , 15/05/20 13:48 Post#: 44641507
In conclusion, I amfully confident that ISX/HWLE will have much better replies for all of thesearguments supported by relevant precedents - should these 10, in fact, be inASX’s defence along with any others that I have not imagined.
