Australian regulators have widened their action against superannuation trustees over the A$1 billion (US$660 million) collapse of Shield Master Fund and First Guardian Master Fund to include Netwealth Group, Diversa Trustees Limited and Equity Trustees.
The Australian Securities and Investments Commission (ASIC) said Netwealth subsidiaries had admitted contravening the Corporations Act and agreed to pay more than A$100 million to more than 1,000 Australians who invested in First Guardian.
Netwealth Superannuation Services Pty Ltd and Netwealth Investments Limited admitted they failed to obtain, and did not assess, sufficient information while offering First Guardian as an investment option on their super platform.
ASIC Deputy Chair Sarah Court said more than 1,000 members who invested through Netwealth’s platform faced huge uncertainty when First Guardian collapsed.
“This is a welcome outcome for many Australians and stems the significant losses that threatened their retirement savings,” Court said in a media release.
It was the fourth action ASIC had taken against a trustee in its ongoing First Guardian and Shield investigations, and followed Macquarie Group (ASX: MQG) agreeing to compensate investors for A$321 million of losses connected to Shield.
ASIC also launched action in the Federal Court against Infrastructure Partners-owned Diversa Trustees Limited for allegedly failing to conduct adequate due diligence before allowing members to invest about $300 million in First Guardian.
They are among the 12 cases which ASIC has taken against 20 defendants, and is continuing to investigate misconduct relating to the two collapsed funds.
The Australian Prudential Regulation Authority said it had accepted a court-enforceable undertaking from Netwealth to address material weaknesses in its investment governance framework and practices.
APRA has imposed additional licence conditions on the other investment platform that offered Shield, Equity Trustees, to address concerns about its investment governance frameworks and practices, including oversight of investment options for members.
At the time of writing, Netwealth (ASX: NWL) shares were quoted at $25.89, up 64 cents (2.53%) on the day, capitalising the company at $6.436 billion, while Equity Trustees (ASX: EQT) shares were down 34 cents (1.41%) at $24.06, valuing it at $645.4 million.
