In reality, Shield and First Guardian charged higher than usual fees and instead of investing like other super funds in shares and real property, used the $1 billion invested with them to fund the extravagant pet projects of the operators of the schemes, who are also under investigation by ASIC.
ASIC Deputy Chair Sarah Court said Interprac’s alleged oversight and compliance failures exposed thousands of Australians to poor advice and significant financial risk.
“We allege that no competent financial adviser could have recommended Australians invest large amounts of their superannuation in these funds, and that Interprac – as licensee – should have been alert and responsive to the significant risk this conduct posed to clients, but it failed on many levels,” Court said.
SQM Research, led by respected property commentator Louis Christopher, is being sued by the watchdog in a separate case announced on Wednesday.
ASIC alleges SQM breached its obligations when it provided a positive rating for the Shield Master Fund as part of a commercial arrangement. The research firm did this while failing to obtain information it needed to make the assessment, failing to properly consider inconsistencies in the information it did receive and misrepresenting other information, the regulator alleges.
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SQM said in a statement: “We are currently assessing ASIC’s claim and will be making our position known in due course.”
Court said the civil penalty proceedings against SQM marked the first time the regulator had taken action against a research house.
“We believe research houses are important gatekeepers and form part of a critical line of defence against poor quality investments or unsuitable products,” Court said.
A third action announced by ASIC on Wednesday targeted Melbourne financial planning group MWL Financial and its director Nicholas Maikousis – who in September stepped down as the president of respected National Premier League team South Melbourne Football Club.
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A company related to the Shield Master Fund was a main sponsor of South Melbourne until 2024 and a senior staff member at MWL Financial was a board member of the fund.
MWL is accused of advising 556 clients to put about $114 million of their superannuation into Shield while failing to ensure the advice was appropriate and that conflicts of interest were managed.
MWL appointed administrators in late September and as a result ASIC is seeking permission from the court to file the case, Court said.
Lead generator Imperial Capital Group, which worked with MWL to drum up clients for the two funds, is also being sued by ASIC as part of the MWL case.
ASIC alleges the Gold Coast-based group received nearly $13 million in commissions from the fund for assisting in the referrals. MWL was contacted for comment; this masthead was unable to make contact with Imperial which shut down its website in March 2024.
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