The Australian Securities and Investments Commission is suing the country’s largest stock exchange over misleading statements about the progress of its much-delayed and now-abandoned blockchain-based Chess replacement system.
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ASIC claims that statements made in ASX announcements dated February 10, 2022 that the project was “on track for go-live” and “progressing well” in April 2023 are misleading.
Six weeks after these assurances were made, ASX sent the market into disarray by announcing that a further delay to the April 2023 go-live date was very likely. Following this announcement, the exchange operator commissioned Accenture to review the project.
This review identified significant challenges to the solution design and its ability to meet ASX requirements. Following the publication of the Accenture report, ASX decided to pause the project and wrote off $250 million in costs.
Asic claims that the representations made in February were deceptive and misleading because, at the time of the announcements, ASX had no reasonable basis to believe that the project was on track to achieve future milestones.
Asic chairman Joe Longo said: “ASX’s statements go to the heart of confidence in the integrity of our markets. We believe this was a collective failure of the ASX board and executives at the time.”
“We submit that the true state of affairs as of February 10, 2022 was that the project was not ‘progressing well’ contrary to ASX’s announcement.
“The delay and subsequent pause of the project in November 2022 incurred significant costs to ASX and market participants who relied on assurances regarding project progress and the planned go-live date.”
He says Asic has not yet determined the penalty it will impose for ASX’s alleged falsehoods.
