Macquarie Group has agreed to compensate investors for A$321 million of losses arising from the collapse of the Shield Master Fund.
Macquarie said it would repay the net capital invested in Shield through the Macquarie wrap platform, eliminating the need for investors to wait for a complex multi-year process as liquidators pursued the recovery of funds.
The financial services group will purchase investors’ holdings in Shield at fair value and make a goodwill payment to them.
This was consistent with a court-enforceable undertaking from Macquarie’s Macquarie Investment Management Limited (MIML) subsidiary to the Australian Securities and Investments Commission (ASIC).
“The approach of providing immediate certainty and an improved outcome for investors benefits all parties,” Macquarie said in a statement.
As a superannuation trustee, MIML oversaw $321 million in super investments into Shield by about 3,000 of its members between 2022 and 2023.
By contrast, the trustee for the other platform that offered Shield, Equity Trustees, is defending Federal Court proceedings launched by ASIC.
ASIC had started proceedings after MIML admitted not acting efficiently, honestly and fairly by failing to place Shield on a watch list for heightened monitoring, but did not seek a civil penalty due to “exceptional circumstances”.
“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 in a media release.
ASIC said it continued to investigate misconduct relating to Shield and the failed First Guardian Master Fund, whose collapses together cost Australians more than A$500 million of their retirement savings.
ASIC has also expanded legal action against former financial adviser Ferras Merhi, whose businesses allegedly advised clients to invest in Shield and First Guardian.
At the time of writing Macquarie Group (ASX: MQG) shares were trading $2.76 (1.27%) lower at $215.66, capitalising the company at $82.19 billion, while Equity Trustees (ASX: EQT) shares were down $1.92 (7.41%) at $24.00, valuing it at $642.63 million.
