The legal battle between iSignthis Ltd (ASX: ISX) and the Australian Stock Exchange (ASX) continues, with the two parties facing off in an interlocutory hearing on Thursday, in which lawyers of the payment identity company argued that the company would suffer reputational damage if the ASX was able to publish its reasoning behind its trading suspension.
As Finance Magnates reported, iSignthis has been suspended from trading indefinitely since October last year, as the ASX and the Australian Securities and Investments Commission (ASIC) complete their inquiries as to the nature of its revenue and contracted service fee revenue, following volatility in its share price.
In response, the payments identity solutions provider sued the ASX in the Federal Court. iSignthis alleges that in suspending the company from trading, the market operator had breached its own rules and the Corporations Act.
In the hearing, which lasted for the whole of Thursday, Peter Collinson, the lawyer for iSignthis said that the ASX document which provides its reasoning on the lengthy suspension should remain suppressed on the balance of convenience grounds.
iSignthis: ASX failed to make up its mind
According to a transcript of Thursday’s hearing seen by Finance Magnates, iSignthis lawyer Collinson referred to numerous language in the document, such as “It is not clear to the ASX”, “There are serious questions to be determined as to whether”, etc.
According to Collinson: “One of my purposes in just cantering through this material is, if nothing else, your Honour, to demonstrate the complexity of some of the issues. And then… this language, your Honour, reflecting a failure to make up its mind…”
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Furthermore, iSignthis has argued in court that the exchange suspended iSignthis from trading based on speculation in the media and that during its investigation, the ASX failed to take into account certain information as to the significance of gross processing turnover value (GPTV) in affecting the price of shares.
ASX accused of abusing its power
Acting for the ASX, Catherine Button, argued that, in fact, the market operator was already suffering from reputational damage by not publishing its reasonings behind the suspension, as it was unable to address shareholder concerns.
Button also said that iSignthis was “not an entity with an unblemished reputation” based on extensive reports and there was a “desire to know” why iSignthis was suspended from trading in October, as the market operator has been accused of abusing its power and being motivated by conflicts of interest.
“The ASX is in a situation where, in its inability to publish its reasons, it is unable to put to bed why there is a suspension and the reasons for it,” she said.
As Finance Magnates reported in February, iSignthis made a 12.96 per cent strategic investment in NSX Limited, an operator of an Australian exchange. Therefore, making iSignthis a direct competitor of the ASX.
During the hearing, iSignthis lawyers also argued that the ASX has more power than the corporate regulators following the extension of certain listing rules. However, Button argued against this point, stating that the market operator was obliged to monitor and enforce listing rules.