Netwealth Seeks Aussie Govt Help to repay Its Customers
- Business Asia Pacific Companies Funding
Global Business Magazine- 3 minutes read
The Adelaide-headquartered Netwealth, one of the fastest growing wealth management businesses in Australia, on Monday sought the Australian government assistance to repay around 1,088 customers who lost over $66 million in the collapse of the First Guardian Retirement Investment Scheme last year.
Netwealth claimed that the fraud by the scheme and its manager, Falcon Capital, caused the losses, the company informed the Australian Securities Exchange (ASX) in a bourse filing this morning.
The $66 million in funds are among $780 million in retirement savings collectively put at risk by the collapse of First Guardian, Shield Master Fund and Australian Fiduciaries.
Since February 2022, funds totalling more than $480 million were invested in Shield by at least 5,800 consumers who accessed the fund through various independent superannuation investment platforms, including Netwealth.
In an application submitted to the Australian Minister for Financial Services Daniel Mulino on October 24 for financial assistance after its clients lost a combined $101 million as a result of the collapse, Netwealth’s subsidiary, Netwealth Superannuation Services Pty Ltd (NSS), said that it considered First Guardian’s fund manager Falcon Capital to have engaged in fraudulent conduct resulting in losses to the Netwealth Superannuation Master Fund.
Under Industry Act
The company’s request for financial assistance under Part 23 of the Superannuation Industry Act seeks to restore members to their position prior to the fraud occurring, Netwealth said.
Part 23 applications may be approved by the Minister where the fund suffered loss from fraudulent conduct or theft, and the loss substantially reduced the fund causing difficulties paying benefits, the company said.
“Any Financial Assistance granted will be applied to restore the Fund and to compensate impacted members. The Application seeks to restore members to their position prior to the fraud occurring,” Netwealth said.
Falcon Capital has since been placed into liquidation and investigations by the Australian Securities and Investments Commission (ASIC) are ongoing.
“While acknowledging that work by liquidators and ASIC is ongoing, Netwealth believes sufficient evidence exists to establish that losses arose from fraud and that Part 23 requirements have been met,” the company said.
