Diversa Trustees has applied to the government for a $239 million bailout of First Guardian investors. In an update to stakeholders, Diversa said it had submitted its application to the government for financial assistance to remediate clients, under Part 23 of the Superannuation Industry (Supervision) Act.

“Diversa considers that it is in the best financial interests of members to make this statutory application and any financial assistance provided will be applied for the benefit of affected members,” the company said in a statement.

“Diversa considers the First Guardian Master Fund’s losses to have resulted from fraudulent conduct.”

Diversa is the trustee for AusPrac Superannuation, YourChoice Super and Praemium – all of which held First Guardian on their platforms.

EQT Holdings, the parent company of Equity Trustees Superannuation Limited, declined to comment about the status of their application for government assistance to remediate members. Investment Magazine understands the group is still considering making an application but also wants to be sure other avenues can be pursued first.

Equity Trustees was the trustee for DASH’s Super Simplifier, which hosted Shield, and NQ Super, which hosted both funds.

Macquarie and Netwealth, both the branded trustee and platform to investors in Shield and First Guardian respectively, have settled with the regulator to remediate investors to their original starting investment position for a combined $421 million. Netwealth had originally applied for a similar bailout to Diversa, which was pulled after reaching the settlement with ASIC.

The Federal Court found that Macquarie breached the law by failing to place the Shield Master Fund on a watch list for heightened monitoring, a concession made by the wealth giant in the Statement of Agreed Facts as part of the settlement announced last year.

Equity Trustees and Diversa Trustees both decided to fight allegations of wrongdoing in court.

Diversa is accused of due diligence failures by allowing members to invest in the fund, failing to conduct adequate ongoing monitoring and failing to enforce holding limits on the investment options.

Equity Trustees is also fighting similar allegations but is defending itself, arguing it was also the victim of fraudulent conduct and that the trustee had no relationship with the advisers, licensees, lead generators, responsible entities, fund managers or property developers involved in the scheme.

APRA has added license conditions to Equity Trustees, Diversa Trustees and Netwealth which include appointing an independent reviewer of its onboarding of high-risk products. 

Equity Trustees and Diversa were the two trustees-for-hire implicated in the collapse. The government is now considering banning the  business model  despite support from ASIC chair Joe Longo who said last year that it could survive the scandal.

Option 1.4 of the ‘Enhancing member protections in the superannuation system’ consultation will consider restricting certain trustee business models, including the outsourced model used by Equity Trustees and Diversa Trustees.

Investments in Shield and First Guardian grew due to a sophisticated network of lead generators that contacted people who used online “superannuation health check” advertisements before utilising high-pressure sales tactics to refer them to financial advisers.

ASIC acted against the Shield and First Guardian funds over concerns investor money was being misused on high-risk investments, pet projects of directors and personal expenses.

Court proceedings against both funds are ongoing and the regulators have acted against advisers and lead generators allegedly involved, as well as launching proceedings against the “gatekeepers” in the advice process, by taking the four trustees to court, along with SQM Research, which gave investable ratings to the funds.