ASIC has launched civil penalty proceedings in the Federal Court against one of the super trustees wrapped up in the Shield Master Fund failure.
The Australian Securities and Investments Commission (ASIC) has alleged that Equity Trustees Superannuation Limited failed in its due diligence requirements over the inclusion of the Shield Master Fund on its platform.
On Tuesday morning, ASIC announced it has commenced civil penalty proceedings in the Federal Court against Equity Trustees, which oversaw the investment of “around $160 million of retirement savings into Shield over 2023 and 2024 through its fund”.
“Instead of acting as an effective gatekeeper for its members’ retirement savings, ASIC alleges Equity Trustees allowed thousands of members to invest in Shield which had no track record. Those members ultimately saw their super balances eroded,” said ASIC deputy chair Sarah Court.
“Superannuation trustees play a critical role helping people save for their retirement. We expect them to do so with care and skill and put the interests of their members first.
“This action should send a clear message to superannuation trustees: proper due diligence is needed when offering investment options for members.”
In the filing, ASIC alleged that Equity Trustees failed in relation to Shield:
- To exercise the same degree of care, skill, and diligence as a prudent superannuation trustee would.
- To act in the best financial interests of its members.
- To do all things necessary to ensure the financial services covered by its Australian Financial Services Licence were provided efficiently, honestly, and fairly.
“This is the first action against a superannuation trustee in relation to this complex set of investigations and we expect more cases to come,” Court said.
“Our first priority has been preserving assets for the benefit of investors, but the next phase will be holding key players to account.”
According to ASIC, Equity Trustees, as trustee for the AMG Superannuation Fund and Super Simplifier, approved the four classes of Shield as investment options on the NQ Super and Super Simplifier platforms.
In a statement on the ASX, EQT Holdings Limited, Equity Trustees’ parent company, said it is “considering ASIC’s claim carefully and will respond on the substance of the claim in due course”.
“Equity Trustees recognises the deeply difficult circumstances for individuals affected. We have fully cooperated with ASIC’s investigation and are carefully reviewing the claim,” said Equity Trustees managing director Mick O’Brien.
“Equity Trustees takes its compliance obligations very seriously and has robust processes in place to uphold the best interests of members.”
In February 2024, ASIC halted new offers of investments in Shield, before seeking asset preservation orders a few months later in June.
“ASIC understands that, since February 2022, funds totalling more than $480 million have been invested in Shield by at least 5,800 consumers, who accessed Shield primarily through superannuation platforms, the trustees for which were Macquarie Investment Management Limited and Equity Trustees,” the regulator said.
“The investigation to date suggests that potential investors were typically called by lead generators and referred to personal financial advice providers who advised investors to roll their superannuation assets into a retail superannuation fund available on a choice platform and then to invest part or all of their superannuation into Shield.”
Equity Trustees also included the First Guardian Master Fund as an option on super platforms it hosted, as did Netwealth and Diversa, with ASIC noting it also has an ongoing investigation into Equity Trustees in relation to the onboarding and ongoing monitoring of First Guardian.
Last month, ASIC’s Court said the regulator’s view is that if a trustee is hosting one of these funds, they “have an obligation to make sure that what is being offered through your platform is fit for purpose and appropriate for investors”.
The deputy chair referred specifically to Macquarie and Equity Trustees as targets for investigation, with the trustees providing Shield as an investment option on platforms they hosted.
Importantly, Court noted, for a sizeable portion of investors in these funds, the legitimacy of a firm such as Macquarie gave them confidence to proceed.
“I don’t want to overgeneralise, but at least some of the investors in the Shield matter are telling us that they thought that their investment was with Macquarie because it was sitting on a Macquarie platform,” she said.
“The fact that they had this underlying investment into this complex Shield Master Fund has come as news to them, and the documents that they saw, many of them had the Macquarie brand on them.
“So, we are very concerned about that, and we are investigating. I think we’ve been public about this before – I hope we have. We are certainly investigating Macquarie and Equity Trustees and considering what options ASIC has available to them to hold them to account for what we think are failures, or certainly, that’s the way our investigation is progressing.”
According to ASIC, it is seeking declarations and civil penalties from the Federal Court.
