Former Electro Optic Systems Holdings Limited (EOS) CEO and director Dr Ben Greene breached his director's duties in relation to EOS's failure to disclose changes to its 2022 revenue guidance to the market, ASIC alleges in new civil penalty proceedings commenced in the Federal Court.
ASIC alleges Dr Greene failed to exercise care and diligence in his consideration of material downgrades worth tens of millions of dollars to the space, communications and defence systems manufacturer's 2022 revenue forecasts.
Between May and June 2022, EOS issued earnings guidance to the ASX that it expected its 2022 revenue to equal or exceed $212.3 million.
By 25 July 2022, ASIC alleges that Dr Greene knew or should have known that the company's 2022 revenue was likely to be substantially less than amount and that EOS was required to disclose an earnings update to the ASX.
Despite this, ASIC alleges Dr Greene failed to adequately inform the Board of EOS and voted in favour of EOS Board resolutions deferring the disclosure.
The company did not disclose the material change in revenue guidance to the ASX for 14 weeks, until 31 October 2022.
ASIC Chair Joe Longo said, 'Directors are required to exercise care and diligence in their roles, especially when they are made aware of material changes to financial information and in consideration of continuous disclosures to the market.'
'ASIC will allege that Dr Greene was aware of a material change in the company's guidance but fell short in his consideration of these financials and EOS's requirements to disclose them to the ASX.'
'ASIC will not hesitate to act to uphold market integrity and support a fair and efficient financial system for all Australians in our public markets,' the Chair said.
ASIC will seek civil penalties, disqualification orders and declarations against Dr Greene.
ASIC has separately commenced proceedings against EOS by way of a Statement of Agreed Facts and Admissions (25-287MR).
