Australian Securities and Investments Commission v Macquarie Investment Management Limited [2026] FCA 303

This case came out of the collapse of the Shield Master Fund and ASIC's response to the way that fund had been made available through the Macquarie Wrap platform. Macquarie Investment Management Ltd was the trustee of the Macquarie Superannuation Plan and also held an Australian financial services licence. Through the Wrap, members could access a broad menu of investment options, including managed funds. The Shield Master Fund was one of those options.

The Court recorded that the Shield Master Fund collapsed in late 2024. Its responsible entity, Keystone Asset Management Ltd, had earlier been the subject of Federal Court orders appointing receivers and managers to property it held otherwise than as sole beneficial owner. Keystone later went into liquidation and the Shield Master Fund was terminated.

ASIC's proceeding against Macquarie was not framed as a claim that Macquarie caused the collapse. The focus was narrower and more practical. ASIC alleged that Macquarie, as an AFS licensee facilitating investments into the fund on behalf of members, failed to do what was necessary under its licence obligations when the fund was added to and maintained on the platform.

The reasons make clear that the case was resolved on admissions and agreed facts. Macquarie admitted the contraventions. ASIC sought declarations of contravention, not a pecuniary penalty. That procedural setting matters because the Court was not deciding a fully contested factual dispute. Instead, it had to decide whether the agreed facts and admissions provided a sufficient basis for the declarations and whether making those declarations was appropriate.

The commercial story is therefore a governance story. Macquarie had a framework for escalating concerns about investment options made available through its platform. The admitted problem was that the framework should have been used for the Shield Master Fund and was not. The case is useful because it shows how a failure to activate an internal control can become the central legal issue.

The Court identified the features of the Shield Master Fund that were known to Macquarie and that warranted putting the relevant fund classes on a watch list. For the Conservative, Balanced and Growth classes, those features included that the fund was new and had no funds under management, the product disclosure statements for the Conservative and Balanced classes contained differing statements about target asset allocations, and the product disclosure statements and other documents given to Macquarie contained inconsistent statements about the identities of the fund managers for the underlying holdings.

The reasons also record two more serious categories of concern. First, there were liquidity risks arising from a proposed investment in the Chiodo Diversified Property Fund because it was an illiquid asset. Secondly, there was potential for conflicts of interest because of related-party relationships involving Keystone, CF Capital Pty Ltd, and entities associated with Mr Chiodo and Mr Frolov. The Court described a network of ownership, directorship and management links between the responsible entity, the investment manager and related property development vehicles.

For the High Growth class, the Court said similar concerns applied, including the matters identified for the other classes and inconsistent statements in documents relating to the identities of the underlying fund managers.

These details matter because the Court's declarations were not based on a vague idea that the fund later failed. They were based on identified characteristics known to Macquarie at the time, which the parties agreed were enough to require watch-listing and closer monitoring under Macquarie's own governance framework.

The reasons also explain the broader relationship structure behind the fund. Keystone was the responsible entity of the Shield Master Fund. Its shares were owned by Malana Management Pty Ltd. The shareholders of Malana were Chiodo Corporation Pty Ltd and the Frolov Family Trust, and the directors of Malana were Mr Chiodo and Mr Frolov. CF Capital Pty Ltd was the investment manager of the Shield Master Fund. The shareholders of CF Capital were also Chiodo Corporation Pty Ltd and the Frolov Family Trust. Keystone was trustee of the Chiodo Diversified Property Fund and the Advantage Diversified Property Fund, while CF Capital was investment manager of both. Both of those funds were wholesale unregistered unit trusts investing in property developments, and a large proportion of the Shield Master Fund's money was invested in the Advantage Diversified Property Fund.

A key feature of the case is the role of Macquarie's Investment Governance Framework. The Court recorded that Macquarie had governance procedures for investment options made available through the Macquarie Superannuation Plan. Of particular relevance was the Watch List maintained under that framework and presented to monthly meetings of Macquarie's Investment Governance Team.

The Watch List was not treated as a mere administrative category. The reasons describe it as a mechanism for highlighting investment options that had reached thresholds where the team was considering further action. Examples given by the Court included applying limits, conducting further due diligence, fund closure and strategy changes. The declarations themselves also refer to additional reporting, due diligence, performance monitoring and other follow-up action.

That practical role is important. A watch list changes what happens next. It can trigger more information gathering, more frequent review, closer challenge of assumptions, and a documented decision about whether the product should remain available, be limited, or be removed. In other words, it is an operating control, not just a label.

That is why this case is useful beyond the financial services sector. Many businesses have equivalent tools, even if they use different names. A supplier risk register, product approval committee, escalation matrix, board exception report or incident review process can all serve the same function. Once a business creates a tool to identify when closer scrutiny is needed, the real compliance question becomes whether staff actually use it when the trigger points arise.

The Court's reasoning shows how an internal framework can become central evidence of what should have happened. Here, the admitted contraventions were framed by reference to Macquarie's own Watch List and the further monitoring action it was designed to trigger. In practical terms, a governance framework can do two things at once. It can help prevent harm if used properly, and it can later define the standard against which the business's conduct is judged.

The central legal issue was whether Macquarie's admitted omissions justified declarations that it had contravened section 912A(1)(a) of the Corporations Act. That provision requires an AFS licensee to do all things necessary to ensure that the financial services covered by its licence are provided efficiently, honestly and fairly. Because a contravention of section 912A(1)(a) also engages section 912A(5A), the Court also had to consider declarations in relation to that civil penalty provision.

Justice Wheelahan summarised accepted principles about section 912A(1)(a). The obligation is itself a source of legal duty. It does not require absolute perfection, but it does impose a reasonable standard of performance. The reasons also note that a contravention requires identifying what it was necessary for the licensee to do, but which it omitted to do.

Procedurally, the Court also had to be satisfied that declarations were appropriate even though they were sought by consent. The reasons explain that the Court still had to be persuaded there was a real controversy, a proper contradictor, a sufficient factual foundation in the agreed facts and admissions, and that the proposed declarations identified the contravening conduct with sufficient precision.

The Court was satisfied on those points. It emphasised that there was a significant legal controversy between ASIC and Macquarie, that the agreed facts and admissions provided a sufficient factual foundation, and that there was a public interest in making declarations of contravention in these circumstances.

This procedural point matters for readers. The judgment is not an example of the Court hearing competing witnesses and choosing one version of events over another. It is an example of the Court independently assessing whether agreed facts and admissions were enough to support formal declarations of contravention. The Court still had to exercise judicial power and decide whether the proposed relief was appropriate.

The Court made the declarations sought by ASIC. It declared that by 1 March 2022, when the Conservative, Balanced and Growth classes of the Shield Master Fund were added to Macquarie Wrap, Macquarie ought to have placed each of those classes on a watch list so they could be subject to further monitoring action, including additional reporting, due diligence, performance monitoring or other follow-up action, but did not do so.

The Court also declared that during the period from 1 March 2022 to 5 June 2023, while those classes remained investment options on the Wrap, Macquarie ought to have placed them on a watch list and did not. It made equivalent declarations for the High Growth class by 6 May 2022, when that class was added to the Wrap, and during the period from 6 May 2022 to 5 June 2023 while it remained an investment option.

By reason of those matters, the Court declared that at all times between 1 March 2022 and 5 June 2023 Macquarie failed to do all things necessary to ensure that the financial services covered by its licence were provided efficiently, honestly and fairly, and thereby contravened section 912A(1)(a). It also declared that, by reason of those contraventions, Macquarie contravened section 912A(5A). Macquarie was ordered to pay ASIC's costs as agreed or taxed.

The reasons are also clear about what the Court did not do. No pecuniary penalty was sought, so none was imposed. The Court did not need to decide what penalty would have been appropriate. It also did not make a compliance program order because ASIC said compliance questions were being addressed through Macquarie's response to an independent review of the design and operating effectiveness of its Investment Governance Framework.

So the outcome was not a damages award to investors and not a penalty judgment after a contested hearing. It was a set of formal declarations recording contraventions, together with a costs order, in a case where remediation had already been addressed separately through an enforceable undertaking.

Before the proceeding was resolved, Macquarie offered ASIC a Court Enforceable Undertaking under section 93AA of the ASIC Act, and ASIC accepted it on 24 September 2025. The undertaking provided for a payment program designed to return to affected investors an amount equal to 100 percent of the net capital amount they had invested in the Shield Master Fund.

The mechanism included a cash-for-asset swap under which Macquarie Financial Limited agreed to purchase all units in the Shield Master Fund held by Macquarie for affected investors in exchange for cash payments into their superannuation or investor directed portfolio service accounts by 30 September 2025. It also included an ex gratia payment to cover any shortfall between the net capital amount and the cash-for-asset swap, and an independent review by 31 October 2025 to assess whether any affected investor had received less than their net capital amount and, if so, to arrange payment of the shortfall.

The Court recorded that an Ernst and Young report dated 31 October 2025 confirmed that the intended payments made to each affected investor were at least equal to their net capital amounts and had been processed and received into investor accounts. The reasons also note that, as a result of the arrangement, Macquarie Financial rather than the affected investors would bear any loss from waiting for remaining or recovered assets of the Shield Master Fund to be realised and distributed.

The judgment gives the figures. Ernst and Young reported that $223,129,494.64 was paid in the cash-for-asset swap and $97,640,681.01 was paid as ex gratia payments, making a total of $320,770,175.65. That slightly exceeded the total net capital amounts of $320,764,258.17 because two affected investors received a cash-for-asset swap greater than their net capital amount.

ASIC told the Court it had agreed not to seek a pecuniary penalty because of what it described as exceptional circumstances. Those included the undertaking and remediation outcome, Macquarie's admissions before the proceeding commenced, the public interest in prompt return of capital to members of APRA-regulated super funds, the contrition shown by Macquarie, and the significance of the admissions in clarifying that trustees of choice superannuation funds must take active steps to assess and monitor funds made available on their platforms.

The Court also noted that Macquarie, at APRA's request, was to address findings from an independent review of the design and operating effectiveness of its Investment Governance Framework in a manner and time acceptable to APRA. That helps explain why ASIC did not seek a separate compliance program order in the proceeding.

For business owners, the practical lesson is about trigger points and follow-through. The Court did not say that every business must predict every product failure. It accepted declarations that Macquarie breached its licence obligations because it should have escalated the relevant fund classes into a closer monitoring process and did not. That is a narrower but very important point.

If your business offers third-party products, services or opportunities to customers, members or clients, ask what your internal process says should happen when warning signs appear. Do inconsistent documents trigger a hold or review? Does a new product with no track record require enhanced due diligence? Do related-party links require conflict analysis? Does exposure to illiquid assets require extra monitoring or limits? If your framework answers those questions, the next issue is whether your people actually use it.

This is also a record-keeping case. A watch list, escalation note, committee paper or risk register entry can show that concerns were identified and acted on. The absence of those records can support the opposite inference. Businesses are often tempted to treat governance documents as broad statements of intent. This case shows they are better understood as operating instructions that need owners, timeframes and evidence of use.

Even outside financial services, the same logic applies. A marketplace operator, software reseller, franchisor, procurement-heavy business or health service provider may all facilitate access to third-party offerings. If your business has a process for flagging concerns but does not use it when the facts call for it, the process itself may become the benchmark for what should have happened.

It is also worth noting the role of admissions here. Macquarie's own admissions, together with agreed facts, gave the Court the foundation for declarations. That means internal reviews, remediation steps and communications with regulators can have lasting significance. If a business accepts that a control should have been used, that acceptance may later shape the legal outcome.

Was this a contested trial? No. The Court's declarations were made on agreed facts and admissions. The Court still had to decide whether the declarations were appropriate, but it was not resolving a full factual contest after trial.

Did the Court find Macquarie caused investor losses? The judgment does not frame the case that way. The declarations concern Macquarie's own admitted failure to place the relevant fund classes on a watch list for closer monitoring under its Investment Governance Framework.

Why does the watch list matter so much? Because it was the practical mechanism for further action. The Court recorded that the Watch List highlighted investment options at thresholds where Macquarie's team was considering steps such as limits, further due diligence, fund closure or strategy changes. The declarations also refer to additional reporting, due diligence, performance monitoring and other follow-up action.

Does this mean every platform operator must remove any product with a red flag? No. The case is about escalation and monitoring, not a rule that every concern requires immediate removal. The admitted failure was not using the watch-list process when the known characteristics of the fund warranted that step.

Why were declarations still important if investors were remediated? Because declarations formally record contraventions and the Court considered there was a public interest in making them. The reasons indicate that declarations serve to record the Court's disapproval of the contravening conduct and to vindicate ASIC's regulatory role.

The judgment was delivered on 20 March 2026. The declarations concern conduct between 1 March 2022 and 5 June 2023, being the periods during which the relevant classes of the Shield Master Fund were added to and remained on Macquarie Wrap. The reasons also record the collapse of the Shield Master Fund in late 2024, the acceptance of Macquarie's enforceable undertaking on 24 September 2025, and the Ernst and Young confirmation report dated 31 October 2025.

This page remains at review status because the reasons refer to annexed agreed facts and are truncated near the end. The judgment is still strong enough to explain the Court's findings, orders and practical implications, but readers should treat this page as a careful explanation of the judgment itself rather than a complete reconstruction of every underlying event connected with the fund.