ASIC sues Magnis Energy over US battery plant

The Australian Securities and Investments Commission (ASIC) has launched civil penalty proceedings in the Federal Court against Magnis Energy Technologies, alleging the company failed to disclose material information about its self-described “flagship” lithium-ion battery manufacturing facility in New York.

ASIC alleges that Magnis, despite becoming aware of inaccuracies in its claims regarding funding of the New York battery plant, automation of battery cell production and ability to produce cells at a rate of 1 GWh per year – equivalent to approximately 10,000 cells per day – failed to disclose the information in a timely manner.

ASIC is also suing Magnis executive chairman Frank Poullas for his involvement in the company’s alleged disclosure failures and for alleged breaches of his director’s duties.

The lithium-ion battery manufacturing facility is run by US business Imperium3 New York (iM3NY), in which Magnis holds a majority stake.

Magnis issued multiple announcements between April 2021 and March 2023, stating the battery plant was fully funded to generate at least 1 GWh of lithium-ion battery cells per year and that the project had begun commercial production.

Magnis also made announcements that the annual manufacturing levels at the plant would continue to ramp up to a production level of 1.8 GWh (15,000 cells per day) and then “double-digit gigawatts” by the end of the decade.

However, the regulator alleges that by at least January 2023, Magnis and Poullas were aware about the inaccuracies in their claims and predictions and that “the plant at that time was struggling to produce 300 battery cells per day.”

ASIC further alleges that by April 2023, Magnis and Poullas were aware that the battery plant “could not manufacture saleable, defect-free battery cells at scale or generate any more than nominal revenue from the sale of cells manufactured at the plant.”

ASIC alleges that in failing to disclose information about the true situation at the battery plant, Magnis and Poullas “engaged in conduct that was misleading or deceptive, or likely to mislead and deceive.”

In an ASX filing, Magnis said the “company will examine the statement of claim in conjunction with its legal advisers and will keep the market informed as required.”

ASIC said the matter will be listed for a case management hearing on a date to be fixed by the court, adding that it is seeking declarations and pecuniary penalties against the company and Poullas.