SQM Research will defend itself in court against ASIC’s allegations that it prepared reports containing misleading representations and that its processes fell short of expected standards.
The proceedings were announced last week, along with action against licensees InterPrac Financial Planning and MWL Financial Services due to each parties’ involvement in the failed Shield and First Guardian master funds.
However, the court action means SQM Research owner and managing director Louis Christopher will have to pull out of his appearance from the Professional Planner Researcher Forum next month.
SQM published three research reports between 2021 and 2022 that rated different classes of the Shield Master Fund as 3.75 out of 5 stars or “Favourable”.
“For more than 17 years, SQM Research has built its reputation on providing objective, high-quality and transparent investment research to financial advisers, platforms and institutional clients across Australia,” Christopher said in a statement on LinkedIn on Monday.
“We have always operated with the highest standards of integrity and in full compliance with all applicable laws and regulatory guidance.
“Our methodologies are robust, continually reviewed and enhanced, and our ratings have consistently been recognised for their objectivity and value to the market. Our track record before this terrible event, has been solid.”
Christopher said the researcher takes its regulatory obligations “extremely seriously” and has co-operated fully with ASIC throughout its investigation.
“We remain fully focused on continuing to deliver high-quality, objective research to our clients and the broader financial services community and so it is very much business as usual,” Christopher said.
As the matter is now before the court, Christopher said he would not make any further public comment.
SQM was paid fees by Keystone Asset Management, the responsibile entity for Shield, for preparing the research reports.
The $1.2 billion collapse of the Shield and First Guardian master funds has left the retirement savings of approximately 11,000 people up in the air.
ASIC shut down the funds due to concerns over misuse of investor money, including spending on luxury personal expenses and inappropriate investments into pet projects of directors of the fund.
Furthermore, it is alleged the funds were paying advice firms to market the funds via lead generators who funnelled clients into the products without considering their best interests or their individual needs and circumstances.
ASIC is suing Equity Trustees, while Macquarie came to an arrangement with ASIC to reimburse Shield investors on its platform.
The regulator is expected to take action against Netwealth and Diversa Trustees, with the former also applying for government assistance to remediate clients.Equity Trustees and Diversa Trustees are expected to do the same.
Several advisers have already been banned by the regulator, while Venture Egg head Ferras Merhi is currently on trial in Federal Court.
The Professional Planner Researcher Forum is being held in the NSW Blue Mountains on 2-3 December, bringing together research houses, asset consultants, platforms, licensees and responsible entities to debate best practice in investment research, advice and managed accounts. Eligible delegates can view the full agenda and register here.
