A senior industry stakeholder has described the class action settlement in the Melissa Caddick fraud case, finalised in April, as a passable result for the SMSF members involved.
“The class action has been finalised. The Federal Court approved a $3.54 million [compensation deal] for 32 SMSF investors. This was against five auditors,” Institute of Financial Professionals Australia (IFPA) head of technical services Natasha Panagis told attendees of the Super Playbook 2025 event, co-hosted by IFPA and the Auditors Institute in Sydney recently.
“The good news is that combined with [the money they got from the receivers] of 39 cents in every dollar invested, this class action settlement amount will add another 10 to 11 cents per dollar invested overall.
“So these affected SMSF investors will get at least 50 cents back in the dollar for every dollar [the fund] invested.
“I suppose that is better than nothing.”
Panagis pointed out the settlement decision was reached on the back of red flags regarding the information Caddick provided to investors that the auditors did not detect. These included fake Australian Securities Exchange holdings and questionable dates quoted, which triggered claims of practitioner negligence.
As such, she took the opportunity to reiterate the takeaway learnings for auditors arising out of this case.
“The key message here is just to ensure there is more rigour involved in your audits. [You have to] check everything. Make sure the [proper and official] documentation is [present] and if you can’t verify [the information provided], that’s something you will need to qualify,” she said.
“So it’s a good lesson to [learn].”
The issue regarding the ability to rely on information provided to auditors by accountants and financial advisers and the need for auditors to properly verify documentation had been previously raised in other industry discussions.
