This initiative targets restoring the financial status of 1088 Netwealth members who collectively incurred a $101 million exposure to the defunct First Guardian entity. Netwealth is asserting that Falcon Capital, First Guardian's responsible entity, engaged in fraudulent activities resulting in substantial losses to the Netwealth Superannuation Master Fund.
According to a company statement, there is sufficient evidence to suggest fraud was a factor in the losses, and therefore, conditions for Part 23 application are fulfilled. However, the company is aware that investigations by liquidators and ASIC are still active, and ministerial deliberation on this complex matter may be prolonged.
In a related development, Macquarie recently settled with regulators to purchase $321 million in client holdings, thereby restoring investors’ original financial positions. However, Netwealth plans to seek financial recoveries from liquidators while managing the remainder within its financial resources.
The comprehensive fallout from the First Guardian and Shield fund collapses has impacted 11,000 investors, totalling a monetary holding of $1.2 billion. Regulatory actions by ASIC indicated concerns over the misuse of investor funds and conflicts of interest. The regulatory body placed a freezing order on First Guardian’s assets a year after starting its investigation in 2024, following Falcon Capital’s halt on investor redemptions.
In response to ongoing scrutiny, Netwealth affirms its compliance with relevant laws and commits to cooperating with governmental and regulatory stakeholders to achieve favourable financial outcomes for its members. Despite assurances, Netwealth acknowledges that government assistance might not fully cover all incurred losses, leaving the company prepared to meet any potential claims.
