Formerly ASX-listed fintech iSignthis has been ordered to pay a $10 million fine for breaching disclosure laws. Its co-founder and former CEO, Nickolas Karantzis, has been banned from managing corporations for six years and ordered to pay a $1 million fine.
On Friday, a Federal Court judge found that Karantzis had breached his director’s duties and failed to ensure information given to the ASX was not false or misleading.
The company, now known as Southern Cross Payments, provides remote identity verification, transactional banking, and payment processing services.
Having relocated to Cyprus in 2022, Karantzis currently heads up a company based there called ISX Financial EU Plc (iSignthis FEU), whose shareholders include iSignthis investors as a result of its delisting in November 2022, under the name Southern Cross Payments.
Justice McEvoy had previously determined that iSignthis breached disclosure rules between 2018 and 2020, including the revelation that VISA had terminated its relationship with the company, which it was aware of in May 2020, but failed to disclose the reasons why.
The judge had also found that iSignthis engaged in misleading or deceptive conduct by representing in August 2018 that less than 15 per cent of total revenue in the FY18 fourth quarter came from one-off or set-up fees.
It was also found that in the same quarter, the company neglected to report that it had recognised approximately $3 million in one-off and non-recurring revenue and had incurred approximately $2.85 million in one-off costs.
The judge has also concluded that Karantzis failed to exercise his powers and discharge his duties with reasonable care and diligence, and failed to take reasonable steps to ensure that the information he provided to the ASX regarding the termination by VISA was not false or misleading.
Justice McEvoy also ruled that Karantzis was involved in the failure of iSignthis to comply with its continuous disclosure obligations regarding the recognition of revenues and costs in 2018.
“The community is entitled to expect that investors will not be misled, the market operator will be respected, and that questions asked by the market operator will be answered accurately and devoid of spin and obfuscation,” McEvoy said.
“Mr Karantzis’ tendency to try to minimise the seriousness of his conduct and in some respects to justify it is troubling. It reinforces the need not only for the public to be protected from Mr Karantzis’ participation in the market, but also, as ASIC submits, for the court’s determination of penalty to reflect a measure of specific and general deterrence.”
The Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings in the Federal Court against iSignthis and Karantzis on 7 December 2020.
“The court has found that iSignthis and Mr Karantzis demonstrated repeated disregard for the law through deliberate acts of non-disclosure and by providing false and misleading information to the ASX,” ASIC deputy chair Sarah Court said.
“This conduct resulted in significant periods where both the market and investors were misinformed.
“ASIC is committed to taking enforcement action to protect market integrity and uphold appropriate standards of corporate governance.”
iSignthis FEU has been advised by Karantzis, its managing director and CEO, that he will be appealing the court’s decision.
“The board notes that the proceedings were civil and not criminal proceedings and relate to disclosure and corporate communications some five to seven years ago in difficult and unprecedented circumstances that the Southern Cross Payments company faced,” the Cyprus-domiciled company stated in a release.
“Mr Karantzis maintains a solid track record, and has been managing regulated financial entities since 2017, including as CEO of the holding company of an ASIC Tier 1 regulated Australian market operator between March 2020 and March 2022.
“The board of ISX Financial maintains full confidence in Mr Karantzis.”
Source: https://greekcitytimes.com/
