ASIC investigates super fund trustee and executive COVID-19 investment switching

The Australian Securities and Investments Commission (ASIC) has confirmed it is considering whether to take action against superannuation fund trustees and executives who switched their investments at the height of the COVID-19 market downturn earlier this year.

Examples of superannuation funds whose members had switched investments in that period were provided to ASIC by the chair of the House of Representatives standing committee on economics, Tim Wilson, and ASIC confirmed those were the types of matters it would investigate.

Among the superannuation cited by Wilson were UniSuper, NGS Super, Cbus and CareSuper.

ASIC’s formal response to Wilson stated: “It is not ASIC’s practice to comment on whether it has formally commenced an investigation or make public comment about the progress of investigations. But we confirm that we are considering the material supplied and what further action might be appropriate for ASIC to take in accordance with our usual practices upon the receipt of intelligence”.

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“We also note that investigations of matters such as breach of directors duties and market misconduct can take some time,” the ASIC response said.

In asking his question of ASIC during a committee hearing, Wilson cited CareSuper and then pointed to other funds.

“For instance, I believe UniSuper have admitted that one member, who is also an executive of the fund, had one or more switch requests processed during the high load periods of their fund to a total value of $445,368,” he said. “We then have other funds where we see other issues similarly occurring.

“AustralianSuper had one person who did a transaction during that time. I'll table that one. We have Cbus, who refuses to provide any information to us, which is interesting. We then have NGS Super. They have outlined that they have trustees who did major transactions—three of them, in fact—during that time.”

“Then we have Rest. Rest has a person who transacted $465,949 in funds,” Wilsons said.

“You can see the pattern of behaviour. We have people who are trustees or managers of funds transacting huge sums of money within a defined period, where it's known that the stock market may not have reached bottom—we have to concede that—but had dropped considerably while they hadn't revalued their unlisted assets and therefore may have been able to secure a benefit. Is that the sort of thing that ASIC would investigate?”