The Nuix Ltd (ASX: NXL) share price is on fire on Tuesday afternoon after emerging from a trading halt.
The investigative analytics and intelligence software provider's shares were up as much as 43% to $1.29 at one stage.
The Nuix share price has since pulled back a touch but currently remains up 31% to $1.19.
Image source: Getty Images
Why is the Nuix share price rocketing?
As we covered here earlier today, Nuix put its shares into a trading halt this morning while it awaited a ruling in the Federal Court of Australia. This was in relation to a claim made by its former CEO, Edward Sheehy.
Mr Sheehy filed proceedings in the Federal Court in October 2020 claiming that he validly exercised options in January 2020 that would have entitled him to be issued with approximately 22.6 million shares.
And with the former CEO insisting that he would have sold these shares long before the Nuix share price had collapsed, he was claiming significant damages.
All in all, Sheehy was seeking an award of damages of up to $183 million plus interest, which was the equivalent of almost two-thirds of Nuix's market capitalisation prior to today.
As you might have guessed from the Nuix share price reaction, the Federal Court has ruled in the company's favour and dismissed Sheehy's claims.
In a brief statement this afternoon, Nuix commented:
[T]he Federal Court of Australia has delivered its judgment in relation to the proceedings brought by Mr Edward Sheehy against Nuix.
The Federal Court this morning dismissed Mr Sheehy's claims. There is no requirement for Nuix to amend its options register and Mr Sheehy is not entitled to any monetary compensation from the company.
And while Mr Sheehy will have a period of time to appeal the decision, it seems unlikely that this will be overturned if appealed. Particularly given that a previous claim for the same matter was dismissed in the supreme court in 2019.
