Macquarie has five days to pay back $321m after Shield Master Fund collapse
A major bank has agreed to pay back $321m lost to a collapsed superannuation fund as it is taken to court by the financial services watchdog.
Macquarie will pay back $321m to thousands of Australians following the collapse of Shield Master Fund.
The major bank has admitted breaking the Corporations Act as 3000 members invested in the failed superannuation fund, according to court documents released by the Australian Securities and Investments Commission (ASIC) on Thursday.
The watchdog says that by not putting Shield Master Fund on a watch list for heightened monitoring, Macquarie failed to do all things necessary to ensure its financial services were provided “efficiently, honestly, and fairly”.
ASIC has now filed proceedings against Macquarie Investment Management Limited in the Federal Court.
Affected investors started getting notifications of the repayment on Thursday, with people saying on social media support groups that their money has been returned by Macquarie.
“Great news, mate, I can only imagine the relief you are feeling,” said one person online, commenting on a screenshot of an email from Macquarie.
“Still lots of us out in the cold. Please don’t go away and continue to lobby for us left.”
“Congratulations! Lots of hard work and sleepless nights on your behalf has paid off!,” said another commenter.
People who used Macquarie to put their money into Shield Master Fund through a self-managed super fund will be repaid under Thursday’s deal.
Speaking to the media on Thursday morning, ASIC deputy chair Sarah Court said Macquarie was making investors whole “despite the culpability of many in that chain”.
“Don’t let that suggest or send a message at all that we are letting anyone off the hook,” she said.
Macquarie says it has agreed to make the repayments because of “the scale of the issue, its material impact on many investors and their limited access to recourse from the many different entities which played a role”.
Some 11,000 people have been caught up in the collapse of Shield Master Fund, First Guardian Master Fund and Australian Fiduciaries, with about $1.2bn being lost. ASIC currently has 25 investigations running.
The watchdog says it is not seeking a civil penalty because Macquarie has agreed to pay back the investments in Shield.
Macquarie’s admission and payment also comes before Shield’s liquidation and proceedings against other involved parties are finalised. It will now be for the Federal Court to determine if the bank’s admissions are appropriate.
Ms Court said trustees such as Macquarie had an obligation to make sure investments they offered were appropriate.
“Many members thought their funds were safe when they used Macquarie’s super platform to invest in Shield, which had no track record,” she said.
“We would clearly welcome or encourage any other trustee that’s been involved in these significant failures to come to us at the earliest opportunity and tell us how they propose to make the investors whole.”
ASIC was encouraging financiers involved to contact the regulator despite running 25 investigations into the associated funds.
“We are pursuing these matters with vigour and intensity, we will be hopefully holding all of the players in this sorry chain to account in due course,” she said.
“But these things are complex matters.”
Ms Court also rejected criticism that ASIC allowed Shield to collapse and did not act fast enough.
“As soon as we have become concerned about whether or not these funds, the assets have remained in these funds, we have taken a huge number of court actions to try to freeze funds, stop the individuals involved ... get the funds wound up, got liquidators in there, and have been doing everything we can to hold people to account.”
Macquarie will make the repayments in full by September 30.
In a statement on Thursday, a Macquarie spokesperson said waiting for liquidation would have dragged out the situation.
“The payment will eliminate the necessity for investors to wait for a likely complex multi-year process as Shield liquidators Alvarez and Marsal continue to pursue recovery of funds,” the spokesperson said.
The payment “recognises Shield’s unique circumstances, notably the scale of the issue, its material impact on many investors and their limited access to recourse from the many different entities which played a role, the approach of providing immediate certainty and an improved outcome for investors benefits all parties”, the spokesperson said.
To make the payments, Macquarie will purchase the investors’ holdings in Shield at the value assessed during the liquidation process.
“In addition, Macquarie will make a goodwill payment to investors, with the two payments equating to 100 per cent of the net capital each client originally invested in Shield.”
The repayment is a “court-enforceable undertaking” from MIML to ensure Macquarie pays back 100 per cent of the invested amounts.
As trustee, MIML oversaw $321m invested into Shield by 3000 people in 2022 and 2023.
ASIC has said it is not pursuing fines against Macquarie due to the strong public interest in getting a timely outcome, so affected people who invested into Shield get certainty about their money, and because of Macquarie’s co-operation and agreement to pay before the liquidation and other court action wraps up.
