Corporate watchdog ASIC sues Equity Trustees Superannuation over role in $160m Shield Master Fund
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Australia's corporate watchdog is suing Equity Trustees Superannuation — which has $88 billion in funds under management and about 800,000 members — for its alleged role in the loss of $160 million of retirement savings in collapsed investment scheme Shield Master Fund.
Shield, a property-focused retail fund, collapsed last year leaving 5,800 investors at risk of losing about $500 million in retirement savings.
The Australian Securities and Investments Commission (ASIC) has commenced civil Federal Court proceedings against Equity Trustees, a subsidiary of EQT Holdings Limited, a company listed on the Australian Stock Exchange.
ASIC alleges Equity Trustees failed "to exercise the same degree of care, skill and diligence as a prudent superannuation trustee would, to act in the best financial interests of its members (and 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 oversaw the investment of around $160 million of retirement savings into Shield over 2023 and 2024.
ASIC Deputy Chair Sarah Court said ASIC was taking action against Equity Trustees as part of its ongoing work to protect members' superannuation savings.
"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," she said.
"Those members ultimately saw their super balances eroded."
Equity Trustees said in a statement it is "considering ASIC's claim carefully and will respond on the substance of the claim in due course".
Managing Director Mick O'Brien said, "Equity Trustees recognises the deeply difficult circumstances for individuals affected".
"We have fully cooperated with ASIC's investigation and are carefully reviewing the claim," he said.
"Equity Trustees takes its compliance obligations very seriously and has robust processes in place to uphold the best interests of members."
He says more generally the federal government needs to introduce measures to crack down on the social media promoters who cold-call and push people to move their super out of APRA-regulated funds, into non-regulated funds.
He said this could include extending the planned unfair trading protections to financial services.
"This reform would close off the loophole that has allowed these products to be sold at an industrial scale," he said.
"We'd advise anyone who sees these social media advertisements to switch super to ignore them and keep scrolling."
"This action should send a clear message to superannuation trustees: proper due diligence is needed when offering investment options for members," Ms Court said.
ASIC is seeking declarations and civil penalties from the court.
In February 2024, the consumer watchdog halted new offers of investments in Shield and made interim stop orders on four product disclosure statements for Shield.
In June 2024, ASIC took action to secure the assets held within Shield so that they may be able to be recovered for the benefit of investors.
ASIC is still investigating Keystone Asset Management, which is the responsible entity for Shield, and went into liquidation.
ASIC also has an ongoing investigation into Equity Trustees in relation to the onboarding and ongoing monitoring of the First Guardian Master Fund, which has impacted thousands of more investors and left their retirement savings at risk.
By business reporter Nassim Khadem
Shield, a property-focused retail fund, collapsed last year leaving 5,800 investors at risk of losing about $500 million in retirement savings.
The Australian Securities and Investments Commission (ASIC) has commenced civil Federal Court proceedings against Equity Trustees, a subsidiary of EQT Holdings Limited, a company listed on the Australian Stock Exchange.
ASIC alleges Equity Trustees failed "to exercise the same degree of care, skill and diligence as a prudent superannuation trustee would, to act in the best financial interests of its members (and to do all things necessary to ensure the financial services covered by its Australian financial services licence were provided efficiently, honestly and fairly".
Shield Master Fund, which collapsed last year, has left over 5,000 investors at risk of losing hundreds of millions in retirement savings. (ABC News: Nick Haggarty)
Equity Trustees oversaw the investment of around $160 million of retirement savings into Shield over 2023 and 2024.
ASIC Deputy Chair Sarah Court said ASIC was taking action against Equity Trustees as part of its ongoing work to protect members' superannuation savings.
"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," she said.
"Those members ultimately saw their super balances eroded."
Equity Trustees said in a statement it is "considering ASIC's claim carefully and will respond on the substance of the claim in due course".
Managing Director Mick O'Brien said, "Equity Trustees recognises the deeply difficult circumstances for individuals affected".
"We have fully cooperated with ASIC's investigation and are carefully reviewing the claim," he said.
"Equity Trustees takes its compliance obligations very seriously and has robust processes in place to uphold the best interests of members."
ASIC has taken previous actions to restrain Shield's operation in 2024. (Supplied: asic.gov.au)
An important 'test case' for consumer protections
Super Consumers Australia CEO Xavier O'Halloran says it will be an important test case for consumer protection.He says more generally the federal government needs to introduce measures to crack down on the social media promoters who cold-call and push people to move their super out of APRA-regulated funds, into non-regulated funds.
He said this could include extending the planned unfair trading protections to financial services.
"This reform would close off the loophole that has allowed these products to be sold at an industrial scale," he said.
"We'd advise anyone who sees these social media advertisements to switch super to ignore them and keep scrolling."
ASIC says super funds play critical role helping people save for retirement
Ms Court said superannuation trustees play a critical role helping people save for their retirement."This action should send a clear message to superannuation trustees: proper due diligence is needed when offering investment options for members," Ms Court said.
ASIC is seeking declarations and civil penalties from the court.
ASIC Deputy Chair Sarah Court says the legal action is to protect members' superannuation savings. (ABC News: Billy Cooper)
In February 2024, the consumer watchdog halted new offers of investments in Shield and made interim stop orders on four product disclosure statements for Shield.
In June 2024, ASIC took action to secure the assets held within Shield so that they may be able to be recovered for the benefit of investors.
ASIC is still investigating Keystone Asset Management, which is the responsible entity for Shield, and went into liquidation.
ASIC also has an ongoing investigation into Equity Trustees in relation to the onboarding and ongoing monitoring of the First Guardian Master Fund, which has impacted thousands of more investors and left their retirement savings at risk.
By business reporter Nassim Khadem
