Federal Court upholds $11 million in penalties and disqualification against iSignthis and former director and CEO Nickolas John Karantzis
AI Analysis
The Full Federal Court has largely upheld the liability findings and sanctions against iSignthis Ltd, now Southern Cross Payments Ltd, and former director and CEO Nickolas John Karantzis. The company must pay AUD 10 million, Karantzis must pay AUD 1 million and is disqualified from managing corporations for six years; the decision reinforces that continuous disclosure harm includes damage to market integrity, not only proven losses suffered by identifiable investors.
Key dates
- 2018-08-03
- iSignthis represented that less than 15% of quarterly revenue came from one-off or set-up fees; the Court found that the proportion exceeded 75% and that approximately AUD 3 million of one-off revenue and AUD 2.85 million of related one-off costs were not disclosed.
- 2020-05-12
- iSignthis received Visa's letter communicating the finality of Visa's decision to terminate its relationship; the Court found that disclosure to the ASX was required on or shortly after this date.
- 2020-12-07
- ASIC commenced civil penalty proceedings against iSignthis and Nickolas John Karantzis.
- 2022-05-11
- iSignthis changed its name to Southern Cross Payments Ltd.
- 2022-11-04
- Southern Cross Payments Ltd was delisted from the ASX.
- 2024-06-21
- The Federal Court found that iSignthis had contravened disclosure laws and that Karantzis had breached relevant director duties.
- 2025-08-08
- The Federal Court ordered iSignthis to pay a AUD 10 million penalty and ordered Karantzis to pay AUD 1 million and be disqualified from managing corporations for six years.
- 2025-09-05
- iSignthis and Karantzis lodged appeals against the liability and penalty decisions.
Suggested considerations
- Firms should consider reviewing continuous-disclosure procedures against Corporations Act 2001 section 674 and ASX Listing Rule 3.1, including escalation criteria for operational, commercial and revenue information.
- Compliance teams may wish to test whether financial reporting distinguishes recurring revenue from one-off or set-up fees and discloses material associated costs consistently with market communications.
- Listed entities should consider documenting how they assess materiality, finality and reasonable grounds for delay when a major counterparty indicates that a contract or relationship may end.
- Boards and senior officers may wish to review controls ensuring that information provided to the ASX is accurate, complete and not misleading, including verification of statements made in analyst briefings and investor presentations.
- Firms should consider confirming that trading suspensions do not cause disclosure controls to stop operating and that market-sensitive developments continue to be assessed during a suspension.
- Companies may wish to retain contemporaneous records of disclosure decisions, legal advice, board or committee deliberations and communications with counterparties where disclosure timing is disputed.
- Compliance teams should consider whether director and officer accountability frameworks adequately address the risk of personal civil penalties and disqualification for failures to take reasonable steps to ensure ASX information is accurate.
What changed
The appeal did not introduce a new statutory obligation, but it confirms the substantial enforcement consequences of existing Australian continuous-disclosure and director-duty requirements. The Court upheld findings concerning iSignthis's failure to accurately disclose the extent of one-off revenue and related costs, and its failure from 12 May 2020 to disclose Visa's decision to terminate its relationship and the reasons communicated by Visa. Independent legal commentary highlights that the case provides guidance on materiality under section 674 of the Corporations Act 2001 and ASX Listing Rule 3.1, including that trading suspension does not suspend continuing disclosure obligations and that information may remain market-sensitive during a suspension. The Full Court corrected the wording
Compliance impact
The decision confirms a severe enforcement posture for misleading or incomplete market disclosure: the company penalty is AUD 10 million and the former CEO faces both a AUD 1 million penalty and a six-year management disqualification. The Court's statement that harm includes impairment of market integrity and proper market operation means ASIC need not establish financial loss to a specifically id
Who is affected
Related regulations
References
AI-generated analysis. May contain errors or omissions — verify with the original ASIC source before acting. Full disclaimer.
What the ASIC said
Federal Court upholds $11 million in penalties and disqualification against iSignthis and former director and CEO Nickolas John Karantzis
Published by ASIC . Read the full notice at the source for the authoritative text.