Despite compensation, ASIC activates court action against Macquarie
Macquarie Investment Management (MIML) will be the subject of Australian Securities and Investments Commission (ASIC) action in the Federal Court over the Shield Funds despite agreeing to pay compensation to investors.
ASIC announced today that it had commenced proceedings against MIML following that the firm had not acted efficiently, honestly and fairly by failing to place Shield on a watch list for heightened monitor.
ASIC said it had also accepted a court-enforceable undertaking from MIML to ensure Macquarie pays to members 100% of the amounts they invested in Shield less any amounts withdrawn.
The ASIC announcement said As superannuation trustee, MIML oversaw approximately $321 million in super investments into Shield by around 3,000 of its members between 2022 and 2023.
Macquarie has admitted the allegations in the proceeding. It is a matter for the Court to determine whether the declarations are appropriate.
ASIC has determined not to seek the imposition of a civil penalty in the exceptional circumstances of this matter, including:
- the strong public interest in obtaining a timely court-based outcome which will encourage other superannuation trustees to comply with their legal obligations in the context of choice platforms;
- the interests of providing affected members who invested into Shield through a regulated superannuation fund with certainty in a timely manner; and
- the level of cooperation demonstrated by Macquarie in agreeing to pay members 100% of the amounts invested in Shield less any amounts withdrawn, without waiting for an outcome of the Shield liquidation or proceedings against other parties involved.
“Superannuation trustees offering choice platforms are on notice. They are gatekeepers for retirement savings. ASIC expects them to take active steps to monitor the funds they make available to members through their platforms,” the Deputy Chair Sarah Court said.
“ASIC is continuing to investigate misconduct relating to the Shield and First Guardian Master Funds to hold those involved to account.”
“Macquarie has agreed to pay members 100% of the amounts invested in Shield less any amounts withdrawn”
When did this happen? Surely this is the most newsworthy aspect of the whole situation.
It is fantastic news for the impacted members. It’s also fantastic for the honest majority of advisers, who shouldn’t now be forced to foot as much of the compensation bill through CSLR.
It also sets a great precedent for other platforms, trustees, and licensees, who clearly failed in their oversight and monitoring responsibilities, to ante up.
The issue is that Macquarie have the funds to pay back members, there are some super funds that dont have that ability for example all the industry funds. I just hope none of them ever get tied up in a situation where they go under. The industry is in a very interesting space and we can only hope that teh government continue to fix the broken legislation
and ASIC should have Macq deposit $100m into the CSLR so it’s funded for the next 5 yrs (at the $20m adviser cap lvl)
This is ridiculous. Macquarie provides an avenue for people to invest in assets, just like Australian Super, HostPlus etc provide direct equity access. Should they now be responsible for ASX listed investments which turn out to be dodgy?
You clearly didn’t follow the history with this. Significant breaches in Company, Super and ASIC laws. This was fraud at an epic scale including significant compliance failures. Wait for the other compensation claims against Interprac that will follow.
I am not agreeing 100% with this comment but there also needs to be some responsibility accepted by the consumer here. My reading on this issue pointed to the lead generation being perpetrated through links on social media. If you are going to commit your life savings after following prompts through social media, particularly with the prevalence and warnings of fraud through outlook, SMS etc, then surely caveat emptor must apply to some degree.
Macquarie informed investigators through their app funds were invested in certain classes. That was false and incorrect. What part don’t you understand from failure to do their responsibility? If a super market put on their shelves a product and the consumers are told that product is what it says it is, only to purchase that and realise it was an empty box with nice labelling and no product, you want to blame the consumers? Honestly, you didn’t follow the court proceedings and thought it’s a good idea to put your 2c worth out there. We still have investors that have psychological damages through this. Opportunity losses and struggling mentally with what have happened.
Are you involved in recommending this somewhere in the chain
No mate, hosting specific managed funds, approved by the trustees, with no returns track record, to be on their super fund investment list, is vastly different to having super fund access to the ASX listed shares.
Aust Super, Hostplus and others typically have risk controls such as ASX300 only, no more than X% in direct shares etc.
But it does raise an interesting point about how much responsibility a super trustee has to ensure third party investment options on its super platform are “safe” for members. And yes, that might even extend to ASX300 shares. My understanding is Macquarie is not being blamed for failures as a platform provider, they are being blamed for failures as a superannuation trustee.
Super trustees for platforms that offer third party investment options will now be reconsidering their risk exposure. It may well see the likes of Aust Super and HostPlus remove their direct share offering. It will almost certainly see a massive reduction in investment options for the super products of platforms like HUB, CFS Edge, Netwealth, BT, and of course…Macquarie.
If super consumers want a wide range of investment choices, they will need to assume the trustee responsibility themselves, by using an SMSF.
Now Interprac needs to come to the table and acknowledge it failed its responsibility as oversight licensee of Venture Egg and compensate opportunity losses, interest and damages to these members!
The CEO has made it very clear they will take zero responsibility. Abhorrent behaviour
Taking any further action is a critical mistake by ASIC (if I read this correctly). Maquarie has done the right thing here by moving quickly to give investors certainty and dignity in retirement for a colossal mistake. They have demonstrated strong leadership and it’s a position others should follow quickly. ASIC taking the matter further just tells industry participants that they should never cooperate, never give an inch and always fight the regulator. This is bad for investors. This entire saga is a colossal failure by all involved – especially ASIC. It’s time to take stock and look really hard at the regulatory framework we operate in.. the reality is that ASIC can’t enforce the weight of its own rules and platforms can’t properly supervise the thousands of products they offer. We need to SERIOUSLY look at what has been gained by the last 15 years of wasteful box ticking and bureaucracy.
In my view – nothing.
Everyone is independent and no one is responsible.
The “bad old days” aren’t so bad when a big financial institution can stand by their decisions a look after people. Well done to the board and executive of Maquarie for looking out for the people that trusted them.