Macquarie Investment Management Limited (MIML) has contravened the Corporations Act by failing to place the Shield Master Fund on a watch list for heightened monitoring, according to the Federal Court, but will not face any further penalties.
Justice Michael Wheelahan made declarations that MIML, which is a subsidiary of Macquarie Group Limited and superannuation trustee of the Macquarie Superannuation Plan, should have placed the Shield investment options on a watch list for further monitoring, such as additional reporting, due diligence, performance monitoring or other follow-up action.
The declarations were based on a statement of agreed facts and admissions filed by MIML and the Australian Securities and Investments Commission (ASIC) in proceedings commenced by the latter.
ASIC started that action after it accepted a court enforceable undertaking from MIML to pay more than 3000 people the full amount they had invested in Shield, less any amounts withdrawn, leading to around $321 million being paid to affected fund members in September last year.
The corporate watchdog stated Justice Wheelahan said the declarations were appropriate because “they inform the public of the harm arising from Macquarie’s contravening conduct and they deter other corporations from contravening the Corporations Act”.
The regulator added it “determined not to seek the imposition of a civil penalty against Macquarie given the exceptional circumstances, including the strong public interest in obtaining a timely court-based outcome, which will encourage other superannuation trustees to comply with their legal obligations in the context of choice platforms”.
It added other reasons for not seeking a penalty were providing affected members who invested in Shield with certainty in a timely manner and the level of cooperation demonstrated by MIML in agreeing to pay members without waiting for an outcome of the Shield liquidation or proceedings against other parties involved.
ASIC deputy chair Sarah Court said: “Australians expect super trustees to take the steps necessary to monitor funds available on their platforms.
“In this case, those steps could and should have triggered closer scrutiny of these investments.
“Today’s declarations reinforce that trustees must put members first and take active steps to identify and respond to risks.”
