The Nuix Ltd (ASX: NXL) share price was struggling today with a looming legal case from the company’s ex-CEO making news.
Adding to the downside, there are now two class action law firms looking at the investigative analytics and intelligence software provider.
By the market’s close, the Nuix share price was trading 6.83% lower at $3.41.
Nuix’s $200 million dark cloud
Between missing prospectus forecasts and heavy media scrutiny, Nuix has had a challenging start to its listed life – to say the least.
Yesterday, Fairfax publications questioned Nuix’s past financial reporting. Specifically, this related to options reportedly purchased by Blackall, an entity said to be controlled by former Nuix board member Tony Castagna.
Due to a lack of paperwork, questions have arisen surrounding whether the purchase was all above board.
But today is a new day, and with it brings a new controversy reported by The Age. The latest story concerns former Nuix CEO Eddie Sheehy and his options in the company.
The options in question were a part of Sheehy’s remuneration package in 2008. A condition of exercise was for Nuix to sell or list in an initial public offering (IPO) for over $40 million.
The core issue revolves around a 50 for 1 share split in 2017, which Nuix’s lawyers say did not apply to Mr Sheehy’s options. Additionally, Nuix lawyers argue that the December IPO does not meet the sale criteria for which the options were exercisable.
After the Nuix share price surged upon listing, Mr Sheehy’s options were valued at $250 million.
Commenting on the matter, as reported by The Age, Mr Sheehy said, “Currently, and by all accounts, Nuix is going to owe me over $200 million in damages. So, the big question for all shareholders is, where is Nuix going to find the funds to pay me? And, if it can’t find the funds, what happens next?”
Further pressure on Nuix share price
Former employees are not the only ones looking for Nuix blood. Missing prospectus forecasts within the first year of listing, among other revelations, has left some shareholders jaded.
Reportedly, at least two class action specialist firms are evaluating the potential for shareholder lawsuits. Both Quinn Emanual and Phi Finney McDonald are investigating Nuix, focusing on misleading and deceptive conduct or breaches of continuous disclosure obligations.
The barrage of negativity was temporarily masked earlier in the week by an apology from current CEO Rod Vawdrey. It seems the respite was short-lived, with the Nuix share price taking another hit from today’s developments.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
More reading
- Why Flight Centre, Iluka, Nuix, & Oil Search shares are tumbling lower
- Which ASX 200 shares withstood today’s selloff?
- ASX construction giants under fire over cost blowouts, lack of competition
- Why Appen, ELMO, Nuix, & Paradigm shares are pushing higher
- Nuix (ASX:NXL) share price up 6% despite fresh claims of bad business
The post Nuix (ASX:NXL) share price slips 7% on looming legal action appeared first on The Motley Fool Australia.
from The Motley Fool Australia https://ift.tt/3f3vG5n
Leave a Reply