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In a major win for superannuation investors, Macquarie Group (ASX: MQG) has agreed to pay out investors affected by the Shield Master Fund collapse after admitting to failures in overseeing about $321 million poured into the fund.
The investment bank’s subsidiary Macquarie Investment Management Ltd (MIML), which is subject to legal proceedings by the corporate regulator, has admitted it contravened the Corporations Act by not acting “efficiently, honestly and fairly” after failing to place Shield on a watch list for heightened monitoring.
After launching Federal Court action against MIML, the Australian Securities and Investments Commission has accepted a court-enforceable undertaking to ensure Macquarie pays members the full amounts invested in Shield less any withdrawals made.
“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,” says ASIC deputy chair Sarah Court.
“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.”
ASIC previously launched legal action against Equity Trustees Superannuation, a subsidiary of EQT Holdings (ASX: EQT), over alleged oversight failures at the collapsed Shield Master Fund.
It was the first salvo against the superannuation sector for collectively putting at risk $1.2 billion in retirement savings involved in the collapse of Shield, First Guardian Master Fund and Australian Fiduciaries.
As superannuation trustee, MIML oversaw about $321 million in super investments into Shield by some 3,000 of its members between 2022 and 2023.
While Macquarie has admitted the alleged failures in the proceedings, ASIC says it is a matter for the court to determine whether the declarations are appropriate.
In securing admissions from MIML, the corporate regulator is not seeking a civil penalty against the super manager citing “the exceptional circumstances” of the matter.
These circumstances include the strong public interest in obtaining a “timely court-based outcome” that ASIC says will encourage other superannuation trustees to comply with their legal obligations in the context of choice platforms.
ASIC says it is also in the interests of providing affected members who invested into Shield “certainty in a timely manner”.
It also reflects Macquarie’s cooperation in agreeing to pay members all of the net investments made through the Shield fund without the need to wait for the liquidation process.
“Superannuation trustees offering choice platforms are on notice,” says Court.
“They are gatekeepers for retirement savings. ASIC expects them to take active steps to monitor the funds they make available to members through their platforms.
“ASIC is continuing to investigate misconduct relating to the Shield and First Guardian Master Funds to hold those involved to account.”
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