Australian Federal Court Upholds $7.7 Million in Penalties Against iSignthis & Former CEO

Key Takeaways

• Penalties Upheld: Australia's Full Federal Court upheld approximately $7.7 million (A$11 million) in combined penalties against iSignthis and its former CEO following breaches of market disclosure laws and directors' duties.
• Six-Year Disqualification: The company's former CEO remains barred from managing corporations for six years and must pay approximately $700,000 (A$1 million).
• Disclosure Failures: The underlying case involved misleading revenue disclosures, failures concerning the termination of a relationship with Visa and false or misleading responses to the Australian Securities Exchange.
• Market Integrity: The court affirmed that disclosure breaches can harm the integrity and proper operation of financial markets even without demonstrated financial losses suffered by individual shareholders.
• Appeal Largely Dismissed: The court amended one declaration against the former CEO but left the substantive liability findings, financial penalties and disqualification unchanged.

Deep Dive

The penalties against iSignthis have survived another round in court. Nearly six years after Australian regulators brought proceedings against the payments company and its former chief executive, a federal appeals court has upheld approximately $7.7 million (A$11 million) in combined penalties and a six-year ban on the former CEO managing corporations.

The Full Federal Court largely dismissed their appeals on November 2, leaving intact the principal findings that iSignthis breached market disclosure laws and that its former CEO failed to meet his obligations as a director. The Australian Securities and Investments Commission (ASIC), which began the proceedings in December 2020, announced the ruling on Tuesday.

The company, now known as Southern Cross Payments Ltd, must pay approximately $7 million (A$10 million). Its former CEO faces a penalty of approximately $700,000 (A$1 million), in addition to his disqualification.

The judges accepted one limited challenge concerning the wording of a declaration against the former CEO. They ordered it amended but found no reason to disturb the underlying liability findings or penalties.

The ruling also addresses a question with consequences beyond iSignthis. In upholding the company's penalty, the Full Court recognized that breaches of market disclosure laws can damage the integrity of financial markets even when no particular shareholder has demonstrated a financial loss.

Revenue Disclosures and the Loss of a Major Payments Relationship

The original proceedings concerned several aspects of iSignthis' disclosures between 2018 and 2020, including the composition of its revenue, the termination of a commercially significant relationship with Visa and information supplied to the Australian Securities Exchange (ASX).

iSignthis provided identity verification, payment authentication and payment-processing services. Its business included one-off fees for integrating customers onto its platforms, as well as recurring revenue from processing transactions.

The distinction mattered to investors assessing the company's financial performance. During the quarter ending June 30, 2018, approximately 75% of its reported revenue came from one-off integration and set-up services, rather than recurring payment processing.

The Federal Court found that the former CEO misrepresented the composition of that revenue during an analyst briefing on August 3, 2018. The company also failed to disclose material information about the revenue and associated costs.

Other breaches concerned Visa's decision to terminate its relationship with iSignthis and its Cypriot subsidiary, iSignthis eMoney Ltd. The relationship was commercially significant because the company's payment-processing operations depended in part on access to international payment schemes.

Visa had raised concerns involving anti-money laundering controls, transaction monitoring and the risks associated with the company's operations. The original court found breaches concerning the failure to disclose the termination decision and Visa's stated reasons.

The proceedings also examined responses supplied to the ASX in May 2020. The trial judge found that six answers were materially false or misleading, including through omissions.

Those findings formed part of the case against the company and its former CEO, whose responsibilities included ensuring that information provided to the exchange was accurate.

Court Rejects Challenges to Penalties

Justices Stewart, Cheeseman and Neskovcin upheld the substantive liability findings and penalties imposed by Justice McEvoy. In addressing the company's financial penalty, the Full Court considered the harm caused by breaches of market disclosure requirements.

“The relevant harm included harm to the integrity and proper operation of the market and was not confined to demonstrated financial loss suffered by an identified shareholder,” the judges said.

The reasoning is significant for the enforcement of disclosure obligations. Information released by listed companies informs investment decisions and contributes to the prices at which securities trade. Misleading disclosures can affect that process even when no individual shareholder's financial loss has been established.

ASIC Chair Sarah Court said the decision reinforced the responsibility of companies and directors to provide reliable information to investors.

“Investors are entitled to trust what listed companies tell the market. There is no room for spin,” Court said. “Accurate and timely disclosure goes to the heart of market integrity. When that obligation is not met, it can undermine investors’ ability to make informed decisions and erode confidence in our markets.”

The appellants succeeded in securing one amendment to the original liability judgment. The Full Court found that the terms of one declaration against the former CEO required correction. It ordered the declaration amended without disturbing the findings or sanctions.

The judges said the issue could have been raised during the original proceedings and that correcting it did not alter any substantive liability or penalty outcome. The six-year disqualification and both financial penalties therefore remain in place. The court also ordered the company and its former CEO to pay ASIC's appeal costs.

Proceedings Stretch Back to 2020

ASIC commenced its civil penalty proceedings against iSignthis and its former CEO on December 7, 2020, following the conduct that became the subject of the court's findings. The company changed its name to Southern Cross Payments Ltd in May 2022 and was delisted from the ASX on November 4 of that year.

On June 21, 2024, the Federal Court found that iSignthis had committed multiple contraventions of Australian law. The penalty judgment followed on August 8, 2025, when Justice McEvoy imposed the financial sanctions and disqualified the former CEO from managing corporations for six years.

The company and its former CEO appealed the liability and penalty decisions in September 2025. Monday's judgment leaves the principal findings and sanctions undisturbed. The Full Court also ordered both appellants to pay ASIC's appeal costs.

The decision confirms that courts may consider harm to the proper operation of financial markets when assessing disclosure breaches, without requiring proof of losses suffered by individual investors. It also preserves the personal penalties against the former CEO for his conduct as a director, years after iSignthis ceased trading on the Australian Securities Exchange.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey