Trio option not Govt preferred for Shield, First Guardian

Mike Taylor

Managing Editor/Publisher, Financial Newswire

13 January 2026

ANALYSIS

The Federal Government has signalled it is not comfortable with losses resulting from the collapse of the Shield and First Guardian funds being handled via the so-called Trio formula entailed in Part 23 of the Superannuation Industry (Supervision) Act.

The appropriateness of utilising Part 23 was initially raised by Sequoia Financial chief executive, Garry Crole, and was subsequently pursued by Netwealth and Equity Trustees.

However, the Assistant Treasurer and Minister for Financial Services, Daniel Mulino notably referenced Netwealth’s decision to withdraw its application for Government assistance under Part 23 when it entered into its agreement with the Australian Securities and Investments Commission (ASIC) to compensate members who invested in First Guardian via the Netwealth platform.

Mulino actually congratulated ASIC for having extracted from Netwealth a similar outcome to that achieved with Macquarie Investment Management which saw investors receive 100% of the amounts they invested in the Shield Master Fund, less any amounts withdrawn.

While it remains open to Mulino to approve use of a Part 23 remedy with respect to both Shield and First Guardian, the Government’s preference appears to be for the broader application of the compensation approaches extracted from Macquarie and Netwealth.

However, the similarity between the collapse of Trio Capital and that of Shield and First Guardian are markable, with a 2013 Treasury Review of the Trio Capital fraud providing the following analysis:

“The Trio Capital fraud was highly complex in nature. Based on available evidence, the fraud originated with the establishment of a managed investment scheme (MIS). Trustees, directors and investors alike were continuously deceived throughout the operation of the MIS, in respect of the actual existence of underlying assets and the supposed rates of return on investments”.

That same report stated: “In their supervision of Trio Capital there was no evidence to alert the Australian Prudential Regulation Authority (APRA) or the Australian Securities and Investments Commission (ASIC) that there was a fraud occurring. However, once sufficient information was available and formal investigations commenced, APRA and ASIC acted quickly.

“Nevertheless there appears to be an expectations gap within the community about the regulatory responsibilities of APRA and ASIC and their ability to safeguard against all investment risks as well as an expectations gap within the community about who is responsible for managing investment risks for SMSF trustees.