The corporate regulator wants to expand its proceedings against Equity Trustees to seek compensation from the super fund trustee following Macquarie agreeing to pay members $321 million over its failings related to Shield.
In late August, the Australian Securities and Investments Commission (ASIC) took its first court action against a super fund trustee in relation to the Shield and First Guardian scandals, which put as much as $1.1 billion of member investments at risk.
“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,” ASIC deputy chair Sarah Court said at the time.
“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.”
On Friday, ASIC disclosed that it has sought to amend the proceeding to “seek compensation from Equity Trustees for losses resulting from the alleged failures by Equity Trustees in making the Shield Master Fund available on its superannuation platforms”
The regulator’s proposed amendment remains subject to court approval; however, it would enable the lawsuit to go beyond civil penalties and also attempt to reclaim the losses stemming from the $160 million that members invested into Shield through its platforms.
As the trustee for the AMG Superannuation Fund and Super Simplifier, Equity Trustees approved the four classes of Shield as investment options on the NQ Super and Super Simplifier platforms.
In the original filing, ASIC alleged that Equity Trustees failed to exercise the same degree of care, skill and diligence as a prudent superannuation trustee would, or act in the best financial interests of its members.
The regulator also said the trustee failed to do all things necessary to ensure the financial services covered by its Australian Financial Services Licence were provided efficiently, honestly and fairly.
Equity Trustees, which is the trustee of 14 APRA-registered superannuation funds with approximately $88 billion in funds under management and around 800,000 members, also approved the inclusion of the First Guardian Master Fund on the NQ Super platform.
In a statement on the ASX responding to the amended filing, Equity Trustees’ parent company, EQT Holdings Limited, said it maintains that member losses were “not due to ETSL’s actions”.
“ETSL maintains that it has acted in accordance with its fiduciary duties and obligations under the Corporations Act and the Superannuation Industry (Supervision) Act,” Equity Trustees director Mick O’Brien said.
“ETSL therefore intends to continue to defend the proceeding, including potentially by seeking court orders that other parties pay compensation to members.
“On 30 September 2025, the total investment in the Shield Master Fund for the two superannuation funds for which ETSL is the trustee was revalued in the fund financial statements from $151 million to $78 million; a differential of $73 million.
“The revaluation was based on the midpoint of the valuation range set out in the Financial Position Report prepared by the liquidators of Shield by order of the Federal Court. This indicates that the liquidators expect a material recovery of funds on behalf of members invested in the Shield Master Fund.”
O’Brien added that the trustee continues to provide support services to impacted members and is “assisting the liquidators of Shield in their efforts to recover value for members through the liquidation process and is considering other avenues of recovery for members”.
Last month, ASIC announced that Macquarie Investment Management Limited (MIML) had committed to paying $321 million to cover the losses of thousands of Australians that invested in Shield through its platform.
ASIC 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,” Court said in September.
“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”.
Agree with the comments. ASIC was expected to exercise the same standard of care, skill, and diligence when approving investment funds as it now demands from trustees and financial advisers. Despite proceeding against trustees and certain advisers—some of whom acted in good faith based on available reports and ratings—the regulator’s oversight shortcomings have contributed to adverse outcome.
ASIC have a go at others on finger pointing. Yet, they are the ones doing the finger pointing where it has been found they were warned years back about this very fund and the cold calling operation set up behind it. They were also warned on First Guardian. If ASIC had acted earlier, we wouldn’t be in this mess.
It’s not the first time ASIC have messed up like this. They messed up on Trio Capital. And the reccommendations made after that failure were not heeded to by the regulator nor Government.
It’s wild how often this line gets repeated that the Shield Master Fund had no performance track record. Yet in the Statement of Agreed Facts between ASIC and Macquarie, they both acknowledge that the SQM Research report said the Shield Master Funds were made up of existing underlying funds.
Here’s the extract:
The Shield Master Fund (Balanced Class) invests into two existing funds in a 20/80 split:
20% into CF Capital Investments Advantage Diversified Property Class ($91M FUM, mainly in the wholesale Chiodo Diversified Property Fund)
80% into Pearl/Watershed Funds Management Balanced Fund (around $60M FUM)
So the “no track record” line just doesn’t stack up — anyone could’ve looked up the performance of those two underlying funds.
Correct. All understood (as represented by CF Capital) that Watershed, a recognised/respected manager with a track record, was going to be running 80% of the money, with the remaining 20% in a property development fund. Of course, we now know CF Capital mislead all on that front, including Watershed. The fund didn’t fail because of a lack of track record. And gee, how many new funds are set up by industry super each year?! No, the fund failed because of the fraud. If there was no fraud, the funds would most likely be in operation today.
Correct.
Note the Chiodo Property fund rated 3.5
The highly rated Watershed (80%) got Shield just over the line to 3.75
The 80/20 split ended up over time more like 60/40.
The Chiodo Property Fund was also rated 5/5 by FE fundinfo’s Crown ratings.
100 % agree been told this by other advisers