The Australian Securities & Investments Commission has commenced civil penalty proceedings in the Federal Court against SQM Research Pty Ltd, alleging its investment research reports contained misleading representations and were produced using processes that fell short of expected standards when they assigned “3¾ stars, Favourable” ratings to classes of the Shield Master Fund. ASIC alleges that, in reports published in October 2021, March 2022 and October 2022, SQM Research failed to obtain the information needed to properly assess Shield, failed to properly consider inconsistencies in information it received, misrepresented that it had a reasonable basis for the “Favourable” rating and had exercised reasonable care and skill, and understated the proportion of funds managed by parties related to Shield as well as Shield’s asset allocation. The reports were provided to financial advisers and superannuation trustees who recommended or onboarded Shield, and ASIC notes that around 5,800 people invested their superannuation savings into Shield, often after advice to roll over existing balances into a choice superannuation fund on a platform that had onboarded Shield. ASIC alleges contraventions of section 912A(1)(a) of the Corporations Act 2001 and sections 12DB(1)(a) and 12DB(1)(e) of the Australian Securities and Investments Commission Act 2001, and is seeking declarations and civil penalties. ASIC described the proceedings as its first action against a research house and referenced its recent private credit surveillance report (REP 820) and Regulatory Guide 79 on research report providers as setting expectations that research houses undertake rigorous due diligence and ensure ratings are supported by objective, verifiable information and analysis.
Australian Securities & Investments Commission 2025-11-13
Australian Securities & Investments Commission sues SQM Research over alleged misleading Shield Master Fund Favourable ratings
The Australian Securities & Investments Commission (ASIC) has initiated civil penalty proceedings against SQM Research Pty Ltd in the Federal Court for allegedly misleading representations in its investment research reports on the Shield Master Fund. ASIC claims SQM Research failed to obtain necessary information, misrepresented ratings, and understated related party fund management and asset allocation, affecting around 5,800 investors. This is ASIC's first action against a research house, emphasizing expectations for rigorous due diligence as outlined in its recent private credit surveillance report and Regulatory Guide 79.