The value of listed financial services business Sequoia Financial Group has more than halved during the past 12 months. This would be notable anyway, at a time when the small-cap end of the sharemarket has gained more than 15 per cent, but it’s a standout performance by a company that operates in a sector characterised by a shortage of the services it provides, escalating demand for those services, and consequently clear pricing power.
The performance raises questions for shareholders about the board and executive responsible for it. But shareholders pay their money and take their chances, and in any case, recent past interactions with the company suggest they do not really care.
Clients of Sequoia’s financial advice licensee subsidiary InterPrac Financial Planning, on the other hand, face issues of an entirely different magnitude.
An ASIC statement of claim lodged in the Federal Court on 6 March says that between 2021 and 2024, a total of 6843 clients of InterPrac-authorised advisers invested a total of around $677 million in the First Guardian and Shield managed investment schemes before they collapsed.
The losses suffered by these clients dwarfs the value of the business whose authorised representatives ASIC claims were responsible: at the time of writing, Sequoia is valued at about $26 million. To put that in context, when Sequoia purchased InterPrac in 2017, it valued the licensee on its own at almost $13 million.
InterPrac clients’ losses raise specific questions about the performance of the Sequoia board and management, and the company’s ability to effectively operate an AFSL and monitor the compliance of its authorised representatives. Those questions will likely be answered in court.
But they also raise a question about the efficacy of a system designed to protect consumers of financial advice created since the Hayne royal commission in response to previous advice failures.
The financial advice profession is supposed to have been cleaned up. The bad apples are supposed to have been identified and removed. Education standards are supposed to impose a meaningful barrier to entry and force out those who lack the knowledge, the qualifications, or the commitment to act in clients’ interests. Advisers are also required by law to adhere to a code of ethics, although the issue of “ethics” in financial advice is a discussion for another day.
Despite all this, InterPrac, through the alleged conduct of its authorised representatives and its failure to monitor them adequately, has found itself at the centre of the biggest scandal to envelop financial advice in the past decade, and for good measure it’s managed to drag the APRA-regulated superannuation sector into the mess with it.
The question is whether the alleged actions of the InterPrac advisers identified in ASIC’s statement of claim point to a systemic failure, or whether it is an isolated failure of governance and competence at a single AFSL.
The Sequoia board appeared to recognise some company-specific issues when it appointed former ASIC Commissioner Danielle Press in August 2025 to oversee a governance revamp. But Press left after just seven months, with little progress having been made.
Having failed to improve things from within, and with InterPrac’s reputation increasingly in tatters, Sequoia hit on the idea of selling it. That plan quickly hit a roadblock when the corporate regulator intervened to examine the deal to ensure it was not a way for Sequoia to wriggle out of its AFSL subsidiary’s potential liabilities. When the identity of the buyer, Conquest Investment Partners, was reported by Professional Planner, the ASX stepped in to seek more information about how and when the deal was announced and whether Sequoia complied with listing rules requiring it to keep the market informed.
In response to an ASX query, Sequoia managing director Garry Crole claimed to have had a phone call with this publication and to have had an agreement with it that nothing would be published before the market was updated.
In a sequence of events that can only be described as farcical, it emerged that the conversation had never actually taken place, and that no undertaking to sit on the news had been provided – and nor should one have been provided. Crole apologised to Professional Planner and praised the publication’s editorial integrity.
But in response to the ASX query last Thursday, Sequoia took aim at its own foot and pulled the trigger: “Mr Crole cannot recall for certain which publication the telephone call was with,” it said.
Some of the governance issues are company-specific. But then, the board and the management of Sequoia haven’t exactly been under intense pressure from shareholders to perform any better.
As reported by Professional Planner at the time, the company’s annual general meeting in November last year solicited not a single question from shareholders about InterPrac’s role in the collapse of the Shield and First Guardian. Attention was more intensely focused on the refreshments waiting after the meeting. Shareholders seemed to care more about cake than compliance.
If shareholders can’t keep a board accountable and the value of their investment tanks as a result, they really only have themselves to blame. But if a by-product is slack oversight of an AFSL, leading to the loss of hundreds of millions of dollars of other people’s money, the board must carry the can.
