Afterpay Share Price in Hot Water after Controversial Management Decision

By ,

Buy now, pay later pioneer Afterpay Touch Group Limited [ASX:APT] has experienced a decline recently after a change in management raised some important ethical questions.

At time of writing, the stock is down 2.22% sitting at $25.94. This is likely to be a brief lull however, as the stock has been fluctuating around this mark for some time.

The company has courted much controversy this year, after financial crimes regulator AUSTRAC began an investigation over Afterpay’s potential infractions of money laundering, and counter-terrorism financing laws. Unfortunately this occurred the same day the company completed a $317 million capital raising, leaving investors feeling blindsided.

Despite this the stock price has remained afloat. But will investors and consumers be able to accept the company’s latest hotly debated management decision?

Download now: Three ASX fintech stocks taking on the banks (and winning).

The latest controversy

Michael Saadat, NSW’s former regional commissioner for the Australian Securities and Investments Commission (ASIC) has recently decided to make a career change into the private sector. Namely, into the troubled yet very lucrative Afterpay Touch Group.

In a move that has sparked much debate, Saadat has taken the role of director of public policy and regulatory affairs for Australia and New Zealand, and will commence his new role on 1 November this year.

This new position could potentially cause a conflict of interest as ASIC had been providing regulatory oversight on Afterpay for some time. As the Australian Financial Review (AFR) questions, will Sadaat be in direct contact with his former employees? And should he be involved in any lobbying discussions with ASIC?

However, as Saadat understands the rigorous regulatory framework that companies like Afterpay need to adhere to, he may also be able to provide the expertise they need to operate more ethically. As he told the AFR:

It’s really important for a growing organisation like Afterpay to proactively engage with its regulators in a mature and responsible way.

They have grown fast and they need to make sure they are keeping on top of all of the different issues.

It’s not a traditional financial services company; it’s a tech finance company, it’s an iPhone app — there’s so many things about it that are different. That means there will be challenges along the way and they need to grapple with them.’

What’s next for Afterpay?

The company will still need to answer questions about how they plan to handle consumers who are already in debt or financially irresponsible from using the service.

But overall, the positive buzz around Afterpay has kept its stock price on a steady incline.

Although the new appointment of Saadat presents ethical dilemmas now, if he is able to avoid partaking in any activities that present a conflict of interest, he may bring some positive influence to the company. It also shows the company is taking its regulatory conduct seriously, which is a good sign.

This is definitely a space to watch.


Ryan Clarkson-Ledward,
For Money Morning

PS: Bank Busters! Three Aussie tech plays outsmarting the ‘big four’ banks. Click here to find out more.

About Ryan Clarkson-Ledward

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor…

Humm Share Price Soar on Takeover Proposals amid BNPL Rout (ASX:HUM)

Humm Group [ASX:HUM] share price is up over 20% as the buy now, pay later (BNPL) stock flags potential takeover bids.

Zip Shares Rise as Total Transaction Volume Hits $906 Million in November (ASX:Z1P)

Jittery markets sent ASX buy now, pay later (BNPL) and lithium stocks tumbling on Monday. Zip was one of the hardest hit, with share price closing 10% down.

ASX Lithium and BNPL Stocks Crater on Omicron and Interest Rate Fears

From Afterpay [ASX:APT] to Vulcan Energy Resources [ASX:VUL], BNPL and lithium stocks are under heavy selling pressure today as markets worry about Omicron and inflation.

Zip Share Price Up — Twisto Acquisition Complete (ASX:Z1P)

Zip says acquiring Twisto is an entry point to one of the world’s largest eCommerce markets, with access to all 27 member states of the European Union (EU). Zip Co [ASX:Z1P] share price is currently up 4%:

CBA Shares: First Bank to Offer BTC and Crypto in Australia (ASX:CBA)

The Commonwealth Bank of Australia (ASX:CBA) will become Australia’s first bank to offer its 6.5 million users the ability to buy, sell, and hold crypto assets via the CommBank app.

Redbubble Shares Sink on Q1 FY22 Update (ASX:RBL)

Redbubble [ASX:RBL] share price slumped after registering a 21% decline in gross transaction volume in Q1 FY22. While Redbubble said the results were in line with expectations, investors were disappointed, sending RBL shares lower.