The Federal Court has made declarations Netwealth Superannuation Services and Netwealth Investments Limited contravened the Corporations Act by failing to obtain and assess sufficient information about the First Guardian Master Fund before offering it as a wealth-building vehicle to Netwealth members.
In his judgment in the Australian Securities and Investments Commission v Netwealth Investments Limited [2026] FCA 1186 case, Justice Timothy McEvoy said Netwealth also failed to make sufficient independent inquiries to understand or evaluate the investment risk of the First Guardian Master Fund before and while offering it to members as an investment option and did not provide information regarding the illiquidity of the product.
The declarations follow an enforceable undertaking the Australian Securities and Investments Commission (ASIC) accepted from Netwealth requiring it to compensate affected members 100 per cent of the amounts they invested in First Guardian less any drawdowns. As a result, more than $100 million was paid to over 100 investors in January.
ASIC did not seek a pecuniary penalty in the case partly due to the timely payment of compensation to members.
“Superannuation trustees are a critical safeguard for Australians’ retirement savings and must undertake rigorous due diligence before making investment options available to members,” ASIC chair Sarah Court said.
Between March 2021 and December 2022, when the First Guardian Diversified Class and Growth Class were closed to new investments on Netwealth’s Super Accelerator Plus product, around $128.5 million was invested across the two offerings by 1303 Netwealth members. When redemptions were frozen in May 2024, 1080 members were still invested in First Guardian with investments approximately totalling $100.7 million.
“[This] outcome sends a clear message that superannuation trustees must put members first and take proactive steps to identify and respond to investment risks before members suffer harm,” Court indicated.
ASIC, which has 14 cases underway against 31 defendants, confirmed it is continuing to investigate alleged misconduct relating to the Shield and First Guardian master funds.
