Why fund managers exited Sequoia Financial Group over licensee misconduct

A cash-backed value thesis at Sequoia Financial Group unravelled after authorised representatives under its Interprac licence were linked to the First Guardian and Shield fund collapses.

31 May 2026 · 5 min read

Financial advice licensee Sequoia Financial Group became ensnared in the same First Guardian and Shield Master Fund collapse that hit several other licensees, with Asymmetric Asset Management's December 2025 Monthly Report detailing an exit from the position after the potential cost of remediation and fines threatened what it described as the very existence of the company.

A cash-backed thesis undone by licensee misconduct

Hurdle Rate's July 2025 Monthly Report detailed a thesis that had already soured well before the fund collapse fully emerged: an initial investment premised on the market capitalisation being backed by significant cash following the Morrison divestment, undermined first by a costly and ultimately unsuccessful legal action against a vendor, then by an extraordinary general meeting attempting to remove the board, and finally by growing controversy over authorised representatives operating under subsidiary Interprac's licence. Those representatives, the report detailed, were running concerning sales tactics persuading Australians to set up self-managed super funds and invest heavily in the First Guardian and Shield Master Funds, with some client money also allegedly flowing without consent toward Euree, a Sequoia minority investment.

There was wrongdoing by a multitude of parties (the funds, trustees, ratings agency, platforms, licensee, advisers etc.) which ASIC is now investigating having also launched a large scale media campaign as of late.

— Hurdle Rate, Monthly Report, July 2025

Asymmetric Asset Management's July 2025 report had initially taken a more sanguine view, noting the alleged actions appeared at that stage to be an isolated case, and welcoming the appointment of an ex-ASIC Commissioner as independent chair of Sequoia's AFSL Governance Committee as a sound move sending the right message. At that point the stock traded on a single-digit price-to-earnings ratio with a maintainable, double-digit dividend yield and a rock-solid balance sheet, a valuation that ultimately proved too optimistic once the scale of the licensee misconduct became clear.

What managers are watching next

DMX Asset Management's May 2026 Monthly Report confirmed the position had been cut as a failed investment, framing the decision as part of a disciplined process of dispassionately reassessing positions where the original thesis has become impaired, crystallising the tax loss to redeploy capital into more prospective opportunities. Hurdle Rate's comparison to the earlier Dixon Advisory collapse, where a licensee was placed into administration to limit liability before it could be shifted onto the industry-funded Compensation Scheme of Last Resort, suggests managers are watching whether a similar mechanism ultimately absorbs much of the cost from the Sequoia-linked losses.