No precedent in Macquarie Shield deal says ASIC

The Australian Securities and Investments Commission (ASIC) does not believe the compensation arrangements it entered into with Macquarie Investment Management sets a precedent.

As well, ASIC deputy chair, Sarah Court has confirmed that the decision to pursue the Macquarie remedy was taken by the regulator itself, rather than via consultation with either the Treasurer, Jim Chalmers or the Deputy Treasurer and Minister for Financial Services, Daniel Mulino.

Both Chalmers and Mulino subsequently endorsed ASIC’s actions

Under questioning during Senate Estimates, Court described the Macquarie approach as “an exceptional circumstance”.

She referenced the situation of Shield and First Guardian investors who had moved their funds from a regulated super trustee into a platform onto another regulated super trustee and who had the belief their funds were safe.

“We took the view in this case that rather than pursue contested court proceedings and obtain a pecuniary penalty that, in circumstances, there was a public interest in a timely court-based outcome that would give certainty and a definite outcome for these investors,” Court said.

The ASIC deputy chair said that Macquarie had undertaken to restore in full the capital investors had lost in Shield Master Fund, and that while ASIC had gone to court alleging Macquarie has contravened the law the regulator would not pursue a penalty.

“I have heard concerns about moral hazard and other concerns and they are fair questions but I would think this does not set any precedent at all for this kind of approach

“Our primary concern is to get money back quickly into the hands of these investors and indeed, they were paid within days and those investors are very grateful for that outcome

Asked by Sharma whether it was a decision by ASIC or whether the regulator consulted with the Treasurer or Deputy Treasurer, Court said it was a decision by ASIC that it would accept an undertaking so long as those payments were made to investors in full.

“As usual, we brief offices but the decision was made by the commission,” she said.