The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings in the Federal Court against Equity Trustees Superannuation Limited, alleging failures in care, skill and diligence concerning the decision to allow members to invest in the First Guardian Master Fund.

Over $65 million was invested in First Guardian between June 2023 and March 2024 by around 2,700 members of NQ Super & Pension, a division of the AMG Superannuation Fund for which Equity Trustees was the trustee.

ASIC alleges that Equity Trustees did not obtain critical information before onboarding First Guardian such as its constitution, audited financial accounts or an audit of its compliance plan. Further, ASIC alleges that Equity Trustees allowed its members to invest 100% of their funds in First Guardian despite evidence it was or may have been illiquid.

The regulator is seeking compensation for members for losses resulting from the alleged failures by Equity Trustees in relation to First Guardian, as well as declarations and civil penalties.

In particular, ASIC alleges Equity Trustees:

• Failed to exercise the same degree of care, skill and diligence as a prudent superannuation trustee would in onboarding the different classes of First Guardian
• Failed to act in the best financial interests of members when performing its duties and exercising its powers in relation to First Guardian
• Failed to do all things necessary to ensure the financial services covered by its Australian financial services licence were provided efficiently, honestly and fairly.

ASIC alleges Equity Trustees contravened s52 and 54B of the Superannuation Industry (Supervision) Act 1993 (Cth) and s912A of the Corporations Act 2001 (Cth).

Equity Trustees, as trustee for the AMG Superannuation Fund, approved three classes of the First Guardian Master Fund (Defensive, Diversified and Growth) as investment options on the NQ Super platform.

ASIC also has ongoing civil penalty proceedings against Equity Trustees in relation to the onboarding and ongoing monitoring of the Shield Master Fund.