Federal Court says iSignthis breached disclosure laws, imposes $10m fine

• breached disclosure laws 
• specifically contravened ss 1041H and 674(2) of the Corporations Act 2001 (Cth) 
• engaged in misleading or deceptive conduct by representing on 3 August 2018 that under 15 percent of its total revenue in the fourth quarter to 30 June 2018 came from one-off or set-up fees (one-off revenue representation) 
• failed to disclose from 3 August 2018 that in the fourth quarter to 30 June 2018 it had recognised about $3m in one-off and non-recurring revenue and incurred around $2.85m in one-off costs 
• failed to disclose from 12 May 2020 that VISA had terminated their relationship 
• failed to disclose VISA’s reasons for termination 

Meanwhile, the Federal Court determined that its CEO: 

• breached his director’s duties 
• specifically contravened ss 180(1), 1309(2), 1309(12), and 674(2A) of the Corporations Act, by reason of his involvement in iSignthis’ contravention of s 674(2) 
• failed to ensure that the information given to the ASX was not false or misleading 
• failed to exercise his powers and discharge his duties with reasonable care and diligence 
• was involved in iSignthis’ failure to comply with its continuous disclosure obligations regarding recognising revenues and costs in 2018 
• failed to take reasonable steps to ensure that the information he gave to the ASX regarding VISA’s termination was not false or misleading 

“The Court has found that iSignthis and Mr Karantzis demonstrated repeated disregard for the law through deliberate acts of non-disclosure and by providing false and misleading information to the ASX,” said Sarah Court, ASIC deputy chair, in the media release. “This conduct resulted in significant periods of time where both the market and investors were misinformed.” 

On 26 July 2024, the court declared that the defendants contravened civil penalty provisions under s 1317E of the Corporations Act. 

Federal Court order

In Australian Securities and Investments Commission v iSignthis Limited (Penalty), [2025] FCA 917, the Federal Court of Australia issued an order directing: 

• Southern Cross to pay the Commonwealth a $10m pecuniary penalty under s 1317G(1) of the Corporations Act, in connection with contraventions of s 674(2) of the Corporations Act 
• the CEO to pay the Commonwealth a $1m pecuniary penalty under s 1317G(1) of the Corporations Act, relating to his contraventions of ss 180(1), 674(2A), and 1309(2) and (12) of the Corporations Act 
• his disqualification from managing corporations for a six-year period under ss 206C(1) and 206E(1) of the Corporations Act 

“ASIC is committed to taking enforcement action to protect market integrity and uphold appropriate standards of corporate governance,” Court said in ASIC’s media release.