SQM Research Pty Ltd (SQM Research) prepared reports containing misleading representations and its processes fell short of expected standards when it published "Favourable" ratings for the Shield Master Fund (Shield), ASIC alleges in new proceedings launched in the Federal Court.
SQM Research published reports in October 2021, March 2022 and October 2022, that rated the different classes of Shield as "3¾ stars, Favourable".
ASIC alleges that SQM Research:
- failed to obtain the information it needed to properly assess Shield;
- failed to properly consider inconsistencies in information it received when preparing its reports about Shield;
- misrepresented that it had a reasonable basis for giving Shield a "Favourable" rating and had exercised reasonable care and skill in doing so; and
- made misrepresentations that understated the percentage of funds managed by parties related to Shield and the asset allocation of Shield.
ASIC alleges that the SQM Research reports did not accurately depict the standard, quality, value or grade of Shield, and that reflected deficiencies in the processes SQM followed.
The SQM Research reports were provided to financial advisers and superannuation trustees who recommended or onboarded Shield. Around 5,800 people invested their superannuation savings into Shield. In many cases, people invested in Shield after receiving advice from financial advisers. These advisers often told investors to roll over their existing superannuation balances into a choice superannuation fund available on a platform which had onboarded Shield.
ASIC Deputy Chair Sarah Court said the civil penalty proceedings against SQM Research marked the first time the regulator had taken action against a research house.
'Research houses have a responsibility to ensure they obtain the information needed to prepare their reports, take real care and skill in assessing that information and to present that information accurately.
'We believe research houses are important gatekeepers and form part of a critical line of defence against poor quality investments or unsuitable products.
'Given the important role research houses play in rating funds and investments, the community is entitled to expect that their reports will be accurate and based on appropriate information and analysis,' the Deputy Chair said.
ASIC is seeking declarations and civil penalties from the Court.
Background
SQM Research holds an Australian financial services licence and is a provider of research on investment products.
ASIC alleges SQM Research contravened s912A(1)(a) of the Corporations Act 2001 and s12DB(1)(a) and 12DB(1)(e) of the Australian Securities and Investments Commission Act 2001.
SQM Research charged Keystone Asset Management Ltd (in liq) (the responsible entity of Shield) fees for preparing the research reports.
On 5 November 2025, ASIC released Report 820 Private credit surveillance report: Retail and wholesale surveillance (REP 820), which highlighted the important function external research houses perform in the funds management sector and that research houses are expected to undertake rigorous due diligence to substantiate any ratings they issue.
ASIC's Regulatory Guide 79 Research report providers: Improving the quality of investment research (RG 79), sets out clear expectations for research houses, emphasising their role as "important gatekeepers in the financial services industry." The guide highlights that research report providers must ensure the integrity, quality, and transparency of their research, and that their reports are based on objective, verifiable facts and analysis. ASIC's guidance aims to strengthen confidence in investment research and protect investors from poor-quality advice.
