Getswift Comes Full Circle
Well well. In a pleasing dose of regulatory aggressiveness, The Australian Securities and Investment Commission (ASIC) has filed a Federal Court lawsuit against Bane Hunter and Joel MacDonald of the infamous Getswift (ASX: GSW) – reporting in well under their usual 3 year lead time, I might add. And they would be silly not to, because the case looks like a total slam dunk. I’ve detailed some of Getswift’s shenanigans previously and the AFR took a leading role in discrediting many of the company’s claims last year.
The whole Getswift saga started after Nick Fabrio of Longhorn Capital posted a note outlining inconsistencies in various of Getswift’s claims. Getswift threatened to litigate against him but – oh dear – it later turned out that Nick’s comments were spot on and Getswift itself was suspended from trade and found to have almost certainly misled the market by not fully disclosing details of various contracts (which is part of what the ASIC suit alleges). You can find a link to Nick’s note and the subsequent legal response here:
Letter to N Fabrio – 10.11.2017 (PDF 1mb)
Getswift also claimed a partnership with Amazon and another with NA Williams that would lead to millions of dollars in revenue that never eventuated. Getswift later confessed that it was actually not able to quantify the deal with Amazon.
And this is all a teensy bit problematic, because Getswift raised a hundred million dollars from your friendly neighbour start-up financier, Fidelity. As I said at the time:
How much hubris do you need to have to go out there and say that our new software solution with no switching costs, no exit fees, and currently in a pre-pilot phase will, fo shizzle, “result in over 257,400,000 deliveries on its platform over the next five years, with an estimated aggregate transaction value of $9 billion.”
Getswift was aided and abetted by bullish analyst forecasts, one in particular which estimated the company would grow its revenue 9400% (nine thousand, four hundred percent) YoY from 2017 to 2018 with 99% (ninety-nine per cent) Gross Margins:
The forecasts were highly questionable at the time, are obviously bullshit now, and Getswift itself is a titanic pile of bullshit. How did our heroes arrive at such figures?
What is also very interesting is the role that analysts and advisers played in promoting Getswift to the market. Let us not forget young Sam Kiki of the capital raising, himself reportedly a former employee of Fidelity, and immortalised alongside GSW management in this timeless snapshot:
Were I in ASIC’s shoes I would also be investigating if a) the Fidelity money may have been raised on knowingly false information, and/or b) whether any individuals may have been shadow directors of Getswift at any time, and/or c) whether there are any related party contracts or deals that might not have been fully disclosed. I am not alleging that these things have happened – I do not know if they have – but it seems to me that these would be reasonable lines of enquiry for a regulator making these types of allegations.
Were I in Fidelity’s shoes – sans a hundred million dollars of my investors’ money – I would be extremely tempted to throw a few rocks through the Getswift office windows and/or litigate the company and its officers into penury. I am not Fidelity, but it is my fondest hope that company is taking aggressive action to recover its investors’ assets before the class action gets them.
I strongly encourage you to read ASIC’s concise statement regarding its GSW allegations. Most legal documents are boring – this one is not. The issues raised in there, including many covered at length by the AFR and others, if true, suggest Getswift’s directors may be well and truly cooked. If Hunter and MacDonald are guilty of what ASIC is accusing them of, I hope that they are barred from being a director for a very long time.
As to Getswift, I give it my highest accolade:
P.S. Big Un – you’re next.
P.P.S. Don’t follow Australian sportsmen into investments.
I have no financial position in and no relationship whatsoever with any of the individuals or entities mentioned in this article. This article reflects the personal opinion of the author only. This is a disclosure and not a recommendation.