iSignthis and ASX trade blows over ASIC’s role in suspension


“It has taken us more than a month to get an answer to a simple question about who actually asked for the suspension of ISX shares,” Mr Karantzis said.

In an email to investors on Monday Mr Karantzis said the ASX “has still not told us the ‘why’ that makes any sense to us”.

“It is clear that from the ASX questions that the ASX is now looking for a cause to justify its unprecedented intervention in the market,” he said.

The ASX issued a reply within minutes saying it “at no time represented to ISX or anyone else that the suspension of ISX’s securities on 2 October 2019 was at the direction of ASIC”.

The regulator said at the time the suspension was made in consultation with ASIC given it also was conducting inquiries into iSignthis and “ASX understands that ASIC’s inquiries are ongoing”.

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ASIC declined to respond to requests for comment.

iSignthis provides automated payment verification and payment services to clients to help them meet “know your client” requirements under anti-money laundering regulations.

It has been under intense scrutiny after a dream run this year which saw its share price rise more than 10-fold from 14¢ to a record intraday high of $1.765 last month.

The company’s aggressive stance echoes that of its only significant external investor LHC Capital which last month also queried the basis for the ongoing suspension.

In an investor update on October 20, LHC executives Marcus Hughes and Stephen Aboud said they were comfortable with their iSignthis investment despite its shares being suspended from trading.

They said, based on the regulatory queries which have been made public so far, “we do not yet understand why there was a need to place ISX into suspension”.

“We question why the ASX cannot ‘front-end load’ its questions to expedite its investigations,” said their update to investors. The investment firm’s iSignthis investment makes up about 20 per cent of its LHC High Conviction Fund, according to industry estimates.

It is clear that from the ASX questions that the ASX is now looking for a cause to justify its unprecedented intervention in the market.

John Karantzis, iSignthis

iSignthis was suspended from trading indefinitely on October 2 amid ongoing inquiries from both ASIC and the ASX.

Mr Karantzis confirmed at the time that the company was responding to separate queries from the ASX and ASIC, which have been triggered by recent share price movements.

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iSignthis has responded to two separate queries from the ASX since the suspension and is currently responding to a third.

On October 28, in response to the second ASX query iSignthis reported that one-quarter of the revenue it generated during the June 2018 half year came from two customers which have since been wound up by ASIC citing unconscionable conduct.

The query confirmed that the ASX is looking closely at the company’s June 30 financial performance which delivered hundreds of millions of dollars worth of shares to iSignthis insiders.

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