Troubled regional airline REX is under fire as it faces legal action from the Australian Securities and Investments Commission for deliberately misleading the market regarding its financial situation.

The corporate regulator has alleged REX, along with 4 of its directors, failed to meet its disclosure obligations, by not sharing market-sensitive information that forecast a $35 million profit downgrade in June 2023 in a timely manner.

ASIC alleges that REX, which entered voluntary administration in July this year, told the Australian Securities Exchange in February 2023 that the company would have “positive operating profits” for the 2023 financial year, but “did not have a reasonable basis for that claim”, given it had been incurring operating losses.

ASIC Chair Joe Longo says their case will allege serious governance failures at REX, adding its directors had a responsibility to take reasonable steps to ensure the company complied with the law and will now seek to hold them to account.

REX regional services continue to operate.