First EQT but ASIC lines up other Shield targets | Australian Markets

ANALYSIS

The Australian Securities and Investments Commission (ASIC) has focused Equity Trustees Superannuation Limited as its first main litigation goal ensuing from the Shield Master Trust failure, whereas outlining who else ought to brace for regulatory motion.

It won’t have been misplaced on Equity Trustees, that ASIC additionally famous that the company can be the subject of an “ongoing investigation in relation to the onboarding and ongoing monitoring of the First Guardian Master Fund.

At the identical time as saying the beginning of Federal Court motion in opposition to the superannuation companies of Equity Trustees, ASIC additionally detailed who it’s investigating stating:

“ASIC is investigating the circumstances surrounding Shield. ASIC is investigating Keystone Asset Management Ltd (in liquidation) (the responsible entity for Shield), its directors and officers, the role of the superannuation trustees, certain financial advisers who recommended investors invest in Shield, the lead generators, and the research house.”

The lines of investigation ASIC says it’s pursuing signify a substantial portion of the investment management food chain in Australia, but by no means all.

It is due to this fact value noting other components of ASIC’s announcement yesterday the place it mentioned:

“ASIC understands that, since February 2022, funds totalling more than $480 million have been invested in Shield by a minimum of 5,800 shoppers, who accessed Shield primarily via superannuation platforms, the trustees for which had been Macquarie Investment Management Limited and Equity Trustees.

“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.”

The tenor of the motion mounted by ASIC in opposition to EQT makes clear that the regulator sees superannuation platforms as needing to reside up to their obligations in phrases of being gatekeepers.

ASIC deputy chair, Sarah Court mentioned that as an alternative of performing as an efficient gatekeeper, ASIC could be alleging that EQT “allowed hundreds of members invest to in Shield which had no monitor document. Those members finally noticed their super balances eroded.

“Superannuation trustees play a important function serving to people save for his or her retirement. We anticipate them to take action with care and talent and put the pursuits 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,” Court mentioned.

ASIC alleges Equity Trustees failed in relation to Shield:

• to train the identical degree of care, talent and diligence as a prudent superannuation trustee would
• to behave within the best financial pursuits of its members
• to do all issues needed to make sure the financial providers lined by its Australian financial providers licence had been supplied effectively, actually and pretty.