The Australian Securities and Investments Commission (ASIC) has continued to take legal action over the First Guardian and Shield master fund failures, with proceedings filed in the Federal Court against financial advisory and research firms.
ASIC has taken action against Interprac Financial Planning Pty Ltd and SQM Research Pty Ltd in the wake of the fund collapses, which have cost members more than A$500 million.
The regulator alleged thousands of Australians were exposed to poor financial advice and significant risks from Shield and First Guardian through critical oversight and compliance failures by Interprac.
Interprac allegedly failed to ensure its former authorised representatives, Venture Egg and Rhys Reilly Pty Ltd, complied with the best interests obligations and failed to have adequate risk management systems.
“We allege Interprac failed to ensure certain authorised representatives acted in their clients’ best interests, contributing to hundreds of millions of dollars of superannuation being invested in products that were unsuitable, high risk and costly,” ASIC Deputy Chair Sarah Court said in a media release.
ASIC has also alleged that SQM Research prepared reports containing misleading representations, and its processes fell short of expected standards when it published “Favourable” ratings for the Shield Master Fund.
ASIC Deputy Chair Sarah Court said the civil penalty proceedings against SQM Research marked the first time the regulator had taken action against a research house.
“Research houses have a responsibility to ensure they obtain the information needed to prepare their reports, take real care and skill in assessing that information and to present that information accurately,” the Court said in a media release.
ASIC is seeking declarations and civil penalties in both cases and orders to restrain Interprac from carrying on a financial services business.
ASIC has sought leave to commence Federal Court proceeding to allege serious failings in relation to Imperial Capital Group Australia Pty Ltd's referral of clients to MWL Financial Services Pty Ltd (administrators appointed) and the financial advice given by MWL advisers.
MWL operated a business model involving its former director Nicholas Maikousis and lead generator Imperial Capital that provided inappropriate financial advice to clients to invest their superannuation into the Shield Master Fund, ASIC will seek to allege in court.
