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iSignthis, now known as Southern Cross Payments, has been ordered by the Australian Securities and Investments Commission to pay $10 million in fines.
The company, which provides remote identity verification, transactional banking, and payment processing services made multiple breaches between 2018 and 2020.
The organisation’s former CEO and managing director Nickolas John Karantzis was ordered to pay $1 million and has been disqualified from managing a corporation for six years after he provided false or misleading ASX information.
ASIC commenced proceedings in the Federal Court against iSignthis and Karantzis on 7 December 2020.
On 21 June 2024, the Federal Court found iSignthis engaged in a number of contraventions.
The company’s name was changed to Southern Cross Payments on 11 May 2022, but was delisted on 4 November 2022.
The contraventions iSignthis made, as listed by ASIC were:
- Engaged in misleading or deceptive conduct by representing on 3 August 2018 that less than 15 per cent of the company’s total revenue in the fourth quarter to 30 June 2018 was 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 approximately $3 million in one-off and non-recurring revenue and had incurred approximately $2.85 million in one-off costs.
- Failed to disclose from 12 May 2020 that VISA had terminated its relationship with iSignthis and failed to disclose VISA’s reasons for termination.
Karantzis was personally found to have:
- Failed to exercise his powers and discharge his duties with reasonable care and diligence.
- Was involved in the failure of iSignthis to comply with its continuous disclosure obligations regarding the recognition of revenues and costs in 2018.
- Failed to take reasonable steps to ensure information that he gave to the ASX regarding the termination by VISA was not false or misleading.
ASIC deputy chair Sarah Court said both the market and investors were misinformed due to these actions.
Justice McEvoy, who presided over the case said: “The community is entitled to expect that investors will not be misled, the market operator will be respected, and that questions asked by the market operator will be answered accurately and devoid of spin and obfuscation.”
“Mr Karantzis’ tendency to try to minimise the seriousness of his conduct and in some respects to justify it is troubling. It reinforces the need not only for the public to be protected from Mr Karantzis’ participation in the market, but also, as ASIC submits, for the court’s determination of penalty to reflect a measure of specific and general deterrence.”
