Federal Court: Netwealth Breached Corporations Act Over First Guardian
The Federal Court has ruled that Netwealth breached the Corporations Act by failing to properly assess and disclose the risks of the First Guardian Master Fund before offering it to superannuation members. After more than 1,300 members invested $128.5 million in the fund, Netwealth agreed to compensate affected investors with over $100 million following ASIC action. The decision reinforces the legal responsibility of superannuation trustees to carry out thorough due diligence and highlights that investors who received financial advice to invest in the First Guardian or Shield Master Funds may still have potential rights to seek compensation.
The Federal Court has declared that Netwealth Superannuation Services Pty Ltd and Netwealth Investments Limited contravened the Corporations Act 2001 (Cth) in connection with the First Guardian Master Fund. The declarations follow admissions that Netwealth failed to undertake sufficient due diligence and adequately assess the risks associated with First Guardian before making the investment available to superannuation members.
ASIC commenced proceedings against Netwealth in December 2025. Based on Statements of Agreed Facts and Admissions filed by the parties, Justice McEvoy declared that Netwealth failed to obtain and assess sufficient information about First Guardian and did not make adequate independent enquiries to understand or evaluate its investment risks.
Netwealth also failed to inform members about the potential illiquidity of the investment. These failures occurred before, and while, First Guardian investment options were offered through Netwealth’s Super Accelerator Plus product.
Between March 2021 and December 2022, approximately 1,303 members of the Netwealth Superannuation Master Fund invested about $128.5 million across the First Guardian Diversified Class and Growth Class. When Falcon Capital froze redemptions in May 2024, approximately 1,080 members remained invested, with investments totalling about $100.7 million.
As part of a court enforceable undertaking accepted by ASIC, Netwealth agreed to compensate affected members for 100% of the amounts invested in First Guardian, less any amounts withdrawn. More than $100 million was paid to over 1,000 affected members in January 2026.
ASIC Chair Sarah Court said superannuation trustees are a critical safeguard for Australians’ retirement savings and must undertake rigorous due diligence before making investment options available to members. ASIC stated that the outcome reinforces the obligation on trustees to identify and respond proactively to investment risks before members suffer harm.
ASIC did not seek a pecuniary penalty against Netwealth, having regard to the circumstances of the matter, including the timely payment of compensation. APRA has also accepted a court enforceable undertaking from Netwealth Superannuation Services Pty Ltd addressing material weaknesses in its investment governance framework and practices.
The Netwealth proceeding forms part of ASIC’s broader investigation into alleged misconduct associated with the First Guardian and Shield Master Funds. ASIC has stated that it currently has 14 cases underway against 31 defendants. Separate proceedings concerning Equity Trustees Superannuation Limited and Diversa Trustees Limited remain before the Court.
Financial Dispute Legal is investigating complaints involving financial advice provided to investors in the First Guardian Master Fund and Shield Master Fund. Although affected Netwealth members have received compensation under the enforceable undertaking, investors can still seek to recover compensation as a consequence of financial advice received.
If you were advised to invest your superannuation in the First Guardian Master Fund or Shield Master Fund, contact Financial Dispute Legal to discuss the circumstances of the investment and any potential rights to compensation on enquiry@fdlegal.com.au or 1300 433 533
