The co-founder and former CEO of Australian defence technology company EOS (Electro Optic Systems) is being sued by the nation’s markets regulator, which alleges he delayed disclosing knowledge that the firm’s 2022 earnings would be lower than publicly forecast.

The Australian Securities and Investments Commission (ASIC) began legal action against EOS and its chief innovation officer, Dr Ben Greene — its former CEO and director — in the Federal Court on Tuesday.

EOS is a publicly listed company headquartered in the Australian Capital Territory that makes remote weapons systems including firearms, lasers, counter-drone systems, and space tracking technologies.

The firm has contracts with governments, militaries, and commercial clients and has subsidiaries in the United States and New Zealand.

Separately to Greene, EOS has admitted it was negligent in its handling of its revenue forecast information in 2022 and has agreed to pay a proposed penalty of $4 million over the incident, which will require approval by the Federal Court.

‘Revenue was likely to be substantially less’

EOS told the Australian Securities Exchange (ASX) between May and June 2022 that its expected 2022 revenue would equal or exceed $212.3 million, according to court documents.

However, EOS has agreed with ASIC that by 25 July 2022 it had become aware that its 2022 revenue was likely to be only $164 million, as well as potentially an additional $27 million.

The company did not inform the ASX about this until more than three months later, on 31 October 2022.

“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 [$212.3 million] and that EOS was required to disclose an earnings update to the ASX,” ASIC said.

Greene, who was CEO and a director of EOS at the time, “failed to adequately inform the board of EOS and voted in favour of EOS board resolutions deferring the disclosure”, the regulator alleged.

Greene was EOS CEO until 31 July 2022, when he stepped down after more than three decades in the role and was moved into a newly created position as the company’s head of innovation.

At the time, the move was described by EOS as suiting Greene’s “wishes” and the company’s “future requirements”.

Greene, who was contacted for comment, began his career as a research scientist with the Australian government and later became the director of Australia’s space program.


Electro Optic Systems is an Australian defence technology company which makes remote weapons systems. Image: EOS / LinkedIn

ASIC’s chair, Joe Longo, said company directors must keep the market informed “when they are made aware of material changes to financial information”.

“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,” he said.

“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."

EOS accepts proposed $4 million penalty

While ASIC said it would seek “civil penalties, disqualification orders and declarations" against Greene, it has also begun separate legal proceedings against EOS.

EOS said it accepted ASIC’s findings that it had breached its continuous disclosure obligations between 25 July 2022 and 31 October 2022.

The $4 million penalty proposed by both ASIC and EOS “reflects the seriousness of the contravention while considering EOS’s ongoing cooperation with ASIC’s investigation and its early admission of liability”, ASIC said.

EOS said it also supported ASIC seeking declarations from the company regarding its contravention of continuous disclosure obligations.

“The company navigated a challenging environment in 2022 marked by strategic, financial, and operational pressures,” EOS said in a statement to the ASX on Wednesday.

“… The company announced on 8 September 2022 that delivery against existing contracts had been impacted by supply chain constraints, the awarding of new contracts had been slower than expected and that the company was reassessing its financial outlook.”

EOS chair Garry Hounsell said the outcome of ASIC’s investigation was “a constructive resolution” which was “in the best interests of the company and its shareholders” and removed “the potential of protracted litigation”.

“Since late 2022, we have made significant progress in strengthening our business and remain committed to best-practice and transparent communication,” he said.