On Thursday morning, the Australian Securities and Investments Commission (ASIC) announced that Macquarie Investment Management Limited (MIML) has committed to paying $321 million to cover the losses of thousands of Australians that invested in Shield through its platform.
ASIC has commenced proceedings in the Federal Court against MIML following admissions that it did not act “efficiently, honestly and fairly by failing to place Shield on a watchlist for heightened monitoring”.
The regulator has also accepted a court-enforceable undertaking from Macquarie to ensure it pays members 100 per cent of the amounts they invested in Shield less any amounts withdrawn.
“This is an important outcome that stems the significant losses that threatened thousands of members’ retirement savings after they used Macquarie’s platform to invest their super in Shield,” ASIC deputy chair Sarah Court said.
“Many members thought their funds were safe when they used Macquarie’s super platform to invest in Shield, which had no track record.
“ASIC’s investigation will see Macquarie return these members to the position they were in before their retirement savings were eroded.”
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, with the regulator noting it is a “matter for the court to determine whether the declarations are appropriate”.
ASIC added that it would not seek the imposition of a civil penalty in the “exceptional circumstances of this matter”, citing 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.
It also noted that it took into account 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 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,” Court said.
“ASIC is continuing to investigate misconduct relating to the Shield and First Guardian Master Funds to hold those involved to account.”
Macquarie Super members who invested in Shield have not been able to redeem their funds since February 2024 after Keystone Asset Management redemptions.
Last month, ASIC 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,” Court said.
“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.”
Quite a strange assertion about having no track record. There are numerous articles explaining Shield was invested 80% into Watershed SMAs and 20% property through the Chiodo Diversified Property Fund: https://www.investsmart.com.au/managed-funds/fund/chiodo-diversified-property-dev-cl/43566
What this means is that members of Macquarie Super should consider lodging an AFCA complaint against Macquarie. The compensation offered so far does not reflect the full extent of the losses—particularly given that the reported growth has disappeared and members have gone through a long period with no returns.
A suggested complaint could be worded along the following lines:
“Macquarie has admitted to breaching the Corporations Act. This has caused losses greater than the compensation I have received. I request full compensation for the lost returns I should have earned, as well as recognition of the stress and hardship this situation has caused me.”
This is truly a watershed moment for Australian financial services. Credit where it’s due to both ASIC and Macquarie for reaching a solution that puts money directly back into the hands of affected members.
Let’s be clear – tens of millions could easily have been spent on a protracted legal battle that dragged on for years while retirees watched their savings evaporate. Instead, Macquarie has put their hand up and said “we were wrong, we’ll make it right.” That takes courage in today’s litigious environment.
The $321 million remediation sends shockwaves through the entire financial services supply chain. This isn’t just about one fund or one trustee – it’s about fundamentally changing how every gatekeeper approaches their duty of care.
And make no mistake – the reverberations are just beginning. Equity Trustees is already facing civil penalty proceedings for their $160 million exposure to Shield, and they’re unlikely to get the same cooperative resolution Macquarie negotiated. SQM in my opinion will likely get wound up as they won’t be able to afford the penalty that’s coming their way. Sequoia and Interprac are unlikely to survive what’s heading down the pipeline either. The Shield/First Guardian fallout is going to claim more casualties before this is over.
Going forward, this will forever change the posture of anyone handling client money in Australia. Platform providers, trustees, and fund managers are going to pay real attention to what’s actually happening under their watch. No more rubber-stamping new products without track records. No more passive monitoring while members’ retirement savings are at risk.
ASIC’s message is crystal clear: if you’re a gatekeeper for retirement savings, you better act like one. The days of “set and forget” platform management are over.
I wonder what this means for AFCA/CSLR claims..
There are still opportunity losses, interest and psycological impacts. This isn’t the end and those claims will proceed. Macqaurie’s remedial payments will just be considered as a reduction in the total loss.
Well no, all these Macquarie members can put in a complaint to AFCA about Macquarie because the compensation of just initial investments is not enough!
I’m involved in this, through both Shield and First Guardian, but am not familiar with any link to Macquarie..perhaps l’m not in the 3000 or so that will be vey greatful for this outcome…l hope l just don’t have a full grasp of all the web of connections in all this..fingers crossed for us all.
Next Interprac. Due to their denial, run them through the courts, get them to pay losses, opportunity losses, damages, interests and issue them with a fine equivalent to the total losses they have caused through failure of their duties. Time to make them an example of a financial institution you should not be in Australia. The Board members should all be personally held accountable including the CEO. These type of industrial failures shouldn’t be receiving sympathy by ASIC as it damages the trust in the financial sector and super system due to lack of accountability by companies like Interprac. The psychological damages individuals suffered are immense. Justice needs to prevail!
Well lodge a complaint to AFCA about your super fund. Macquarie are here admitting fault. These super funds have failed everyone miserably. It is the superfunds job to monitor the corporate governance of the investment options.
If you’re with Macquarie lodge an AFCA complaint against Macquarie for the lost returns and growth!
Not sure how you can misinterpret the article. It is Macquarie’s admission of breaking the corporation’s act, s52 of the SIS act and APRA Prudential Standard SPS 530, SPG 530.
Interprac’s CEO must be sweating, he knows what’s coming next….. they won’t survive this.
Finally someone takes some blame, hats off to you macquarie.
Sorry, Macquarie are admitting to breaching the corporations act. They’re paying compensation because they have to! Not because they want to. It is not goodwill here.
Macquarie has also underpaid compensation to everyone! Get your AFCA complaints in about the lost returns that Macquarie doesn’t think you deserve.
Eighteen months of dragging their feet while members carried the emotional toll isn’t ‘hats off’ material—it’s buying time to admit what they already knew was their fault.
Wow… just wow! I had no idea that I made such a good choice with Macquarie.
Maybe there is value in large brands with significant balance sheets after all….
Yes and small business advisers should reasonably be able to rely on them.
I suspect this whole situation will lead to platform operators severely trimming investment menus for their super products. Advisers and clients will be encouraged to use SMSFs on the platform’s IDPS product instead, to get a wide choice of investment options in super.
Thanks for your crystal ball forecast
Full credit to Macquarie for taking ownership as super fund trustees, and not dragging this out for 5+ years. A rare event in the financial services industry and one that should engender trust in their brand.
Also, you have to wonder if they looked at NW balance sheet to see if they had $320m of liquidity
They would have a much bigger amount in their mandatory reserve that should be a certain % of the total funds they have under their management. This is peanuts to them.
Big big precedent. Wonder if MIML will be taking legal action against the ratings agency.
Lots of questions coming from this.
Will Trustees now be included in the CSLR?
Will other trustees have to pay the same?
Totally agree. 100%!
Wow… Does show the benefits of being in a provider with big pockets!!
need to see if other platforms who approved these Funds onto their APL will take the same path?? i suspect not given their small pockets….
It does. As much as it’s easy to throw rocks at big insto’s, they do have the ability to do exactly this (and so they should).
Yep. The other Platforms “involved” don’t have $321M to spare and will be hiding under their desks.
Last reported profit figures:
MQG $3.7BN
NWL $116M
EQT $33M
Diversa $2.4M and is now owned by Apex Group, Bermuda.
The precedents are being set.
This is going to be big.
Advisers are occasionally asked by fund managers to provide “pledges of support” for their funds, so that platforms will include them on their menu.
One wonders how much of the platforms’ decisions to include Shield and First Guardian were driven by pledges of huge volume from the dodgy practice owners at the heart of this scam.
It is platforms that require certain fund flows for all their investment options. The platforms require the options to be used in order to be approved.
It seems you’re giving big business a free pass to be greedy. Afterall it’s what we expect now.
But the reality is Macquarie can’t outsource their obligations under s52 and APRA Prudential Standard SPS 530 to people who simply say they’re interested in an investment option being on Macquarie’s menu. It’s ridiculous to think that small advice businesses were the ones controlling Macquarie and blaming small businesses. Macquarie is coughing up for 1 reason only. It’s Macquarie’s liability
Oh so you’re blaming advisers for Macquarie’s contraventions now.
What glorious morning news. I guess this is the end of sequoia with the amount of fum lost in ausprac
Why so vindictive against Sequoia (and us advisers)?
Because despite Macquarie paying out, Interprac/Sequoia are ultimately responsible for failing to monitor their financial planners. They deserve to be shut down.
Zero compliance from Sequoia. Dover 2.0.
Facts.
Interprac isn’t innocent, they didn’t do their job and were happy to get the numbers and commissions. Their CEO’s stance trying to blame others whilst Interprac clearly failed their responsibility, will cost them their reputation. Not to mention claims against them for damages will be immense the longer they stay in denial about their wrong doing. The court proceedings are ready to flood them.
This seems a comment from SQM Research. They must be getting very nervous and waiting for Macquarie to sue them.
It’s so strange they’re always trying to push liability to the adviser, like somehow we were responsible for their Favourable investment ratings on not only 1 but 2 failed funds.
Because it is your fault
I am not so sure about that. The way a certain director at Sequoia operates, client compensation from platform providers will only reinforce the warped reality that Interprac/Sequoia are an innocent party in all this. Interprac were prepared to overlook how a handful of advisers could write thousands of SOA’s that looked the same because it was paying them 5% commission on new business. You can only assume they must have been getting nervous at some point, so they came up with the narrative to settle their nerves that hey, these funds have got an investment grade rating from SQM Research and they are now available on platforms (because the same crooked advisers told them how much business they would write on the platforms), so the advice must be legit.
A truly glorious morning would be one where Interprac is wound up and advisers asked to operate under a fair dinkum licensee that understands governance standards for 2025 rather than some echo chamber of discontent.
But SQM Research rated the funds as Favourable before any client was recommended it.
And Macquarie and Equity Trustees approved it before any client was recommended it.
Oh wait, but somehow those earlier steps are always the adviser’s fault even though we don’t work for SQM or Macquarie.
You just can’t help some commenters that try to invert the reality to try and protect themselves.