Australia's Securities and Investment Commission is suing the country's top exchange over misleading statements about the progress of its much delayed and now abandoned blockchain-based Chess replacement system.
ASIC alleges statements made in ASX announcements on 10 February 2022 that the project remained “on-track for go-live” in April 2023 and was “progressing well” were misleading.
Six weeks after those assurances were given ASX chocked the market by announcing that there was a strong likelihood of further delay to the go-live date of April 2023. Following that announcement, the exchange operator engaged Accenture to undertake a review of the project.
That review identified significant challenges with the solution design and its ability to meet the ASX’s requirements. Following the release of the Accenture Report, ASX decided to pause the project and wrote down costs of $250 million.
Asic alleges that the assurances given in February were misleading and deceptive because, at the time of the announcements ASX did not have any reasonable basis to imply the project was on track to meet future milestones.
Asic chair Joe Longo says: "ASX’s statements go to the heart of trust in the integrity of our markets. We believe this was a collective failure by the ASX Board and senior executives at the time.
"We allege that the true state of affairs as at 10 February 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 caused significant cost to ASX and market participants who relied on assurances as to the progress of the project and scheduled go-live date."
He says Asic has yet to determine the penalty it will seek for ASX's alleged mistruths.
Helen Lofthouse, ASX managing director and CEO, says: “We recognise the significance and serious nature of these
proceedings. We cooperated fully with ASIC’s investigation and are now carefully reviewing and considering the
allegations."