GetSwift, once a darling of the software market, has been ordered to pay a $15 million fine and its directors have been slapped following a damning Federal Court.

The court described the collapsed software company - which was found guilty in late 2021 of contravening continuous disclosure rules 22 times, along with contravening misleading and deceptive conduct laws on 40 occasions - as the “unacceptable face of start-up capitalism”.

GetSwift offered a service involving last-mile logistics streamlining solutions, and timed the release of annoucements relating to contracts with big firms in order to artificially inflate its stock price. 

This misleading conduct and breaching of continuous disclosure rules sent shares in the company artificially soaring following its launch in 2018 by Phi Finney McDonald lawyers and its managing director (and former AFL footballer), Joel Macdonald. 

The judge in an earlier class action found the company “embarked on a systematic program of pumping up the GetSwift share price, through overly positive and thus misleading announcements to the ASX”. 

In a damning 70-page penalty decision this week, Justice Michael Lee noted a complete lack of contrition by those involved.

“There is no evidence of contrition or remorse by the two of the company’s senior officers primarily responsible,” he said.

“Indeed, such evidence as there is points in the opposite direction. That Mr Macdonald feels a ‘level of peace’ is not only cold comfort to those that have suffered loss, but also reflects a troubling and defiant lack of insight into the scale and seriousness of the wrongdoing set out in excruciating detail in the [court ruling].

“Three days after the publication of an article in January 2018 in The Australian Financial Review entitled “GetSwift: Too Fast For its Own Good” ... Get Swift Logistics ... transferred $72,000,000 to a bank account held by GetSwift Inc (another wholly owned subsidiary incorporated in the United States),” the judge detailed.

“On 22 August 2018, following the commencement of an investigation by the Australian Securities and Investments Commission in February 2018, GetSwift Logistics transferred an additional $8,500,000 to an offshore bank account held by GetSwift Inc, bringing the total funds transferred to $80,500,000.

“These transactions were unexplained by any evidence before me.”

The Federal Court handed down the largest ever penalty against a company for breaching continuous disclosure laws, ordering GetSwift Limited (former ASX:GSW) (GetSwift) (in liquidation) pay a penalty of $15 million.

The Court described Getswift as a company that “became a market darling because it adopted an unlawful public-relations-driven approach to corporate disclosure instigated and driven those wielding power within the company”.

GetSwift’s former director, CEO and executive chairman, Bane Hunter, was ordered to pay a penalty of $2 million and disqualified from managing corporations for 15 years. Former director Joel Macdonald was ordered to pay a penalty of $1 million and disqualified for 12 years. These are two of the highest penalties ordered against directors for corporate misconduct.

Brett Eagle, also a former director of GetSwift, has been ordered to pay a penalty of $75,000 and was disqualified from managing corporations for two years.

ASIC Deputy Chair Sarah Court said; “Disclosure is critical to market integrity and consumer protection”. 

“The penalties imposed by the Court demonstrate the extent and seriousness of the misconduct in this matter and the importance placed by the Court on deterring others from engaging in similar behaviour. ASIC will continue to take action to hold companies and individuals to account for corporate misconduct of this kind,” she said. 

Justice Lee found Mr Hunter “had a laser-like focus on making money for himself and Mr Macdonald and if that involved breaking the law regulating financial markets, or exposing GetSwift to third party liability, that was of little concern to him”.

Justice Lee found Mr Macdonald was focussed on making money and had “little understanding or regard for his legal obligations as a director”.