The Australian Securities and Investments Commission (ASIC) has revealed it is investigating 140 individuals in relation to advice around the collapse of the Shield and First Guardian funds.
ASIC deputy chair, Sarah Court said of those, 20 had already been dealt with, 50 were current and 17 more were on the list.
“They are licensed financial advisers and it is important to make the point that they require resource intensive full investigations,” she said.
ASIC chair, Joe Longo noted that those being pursued by the regulator had made a lot of money – “they have a lot of money and they are all lawyered up”.
Court and Longo’s evidence to Parliamentary Joint Committee on Corporations and Financial Services was that there is a need for a significant tightening of Australia’s investment management eco-system pointing to the widespread outsourcing of blame around the collapse of Shield and First Guardian
The regulator left the committee in little doubt that barely any part of the investment eco-system would escape unscathed from managed investment schemes through to the investment platforms, ratings houses and financial advisers and licensees.
Court said one of the challenges confronting the regulator is “that everybody is point fingers at everyone else”.
“So, for example, the financial advisers are saying to us ‘you can’t hold us accountable for this because the ratings house had rated the Shield Master Fund as of investment grade’, while superannuation fund trustees are telling us the same – ‘well, we relied on the ratings houses’, or ‘we relied on the fact that these members had financial advice’,” Court said.
“So, one of the challenges here is pulling all this apart and work out where does liability lie,” she said.
“Our own view is that there are significant failures and likely contraventions of the law, certainly ones we are looking to take forward, in every link of this chain.”
Court told the committee that the regulator had first become aware of First Guardian in 2020/21 in relation to cold calling and cookie-cutter advice, but not in relation to the fund itself.
ASIC said that it had become aware of problems within the funds, including misappropriation, much, much later.