Macquarie faces lawsuit over fund losses

Macquarie Investment Management Limited confronts a class-action lawsuit concerning the collapsed Shield Master Fund. Gordon Legal initiated the proceedings in Victoria’s Supreme Court, even though Macquarie had consented the previous year to return the original capital to some specified individual investors.

The class action seeks compensation for growth investors’ super could have achieved had it remained invested elsewhere, as well as for distress they allegedly suffered. Around 2,800 account holders who invested approximately $321 million through Macquarie’s platform are represented in the proceedings, with Rachelle Dessent named as lead applicant.

Gordon Legal alleges that Macquarie failed to conduct appropriate due diligence and oversight before allowing investments in Shield through the platform. Dessent expressed her trust in the Macquarie brand, stating that she would not have invested in Shield if it wasn’t for Macquarie’s involvement.

The failure of Shield followed mounting concerns about its investments and their value. The Australian Securities and Investments Commission (ASIC) found that a large proportion of Shield’s money had been invested in a wholesale property fund that made loans to companies associated with a former director of Shield’s operator, Keystone Asset Management.

ASIC alleged a substantial shortfall between the money invested in the property fund and the value of its assets, and that investor funds may have been misapplied. Keystone suspended withdrawals from Shield in February 2024, and administrators later concluded that Keystone was insolvent and recommended it be wound up.

Gordon Legal partner James Naughton stated that repayment of an investor’s original contribution did not necessarily cover the full loss. Naughton emphasized that the missed opportunities for growth in retirement savings can be life-changing, and it is time for Macquarie to pay the full amount back.