Friend,

Last week I gave you my new word: fuct. A fuct is a fact you haven't verified but rely on and communicate.

Diversa Trustees gave the Parliamentary Joint Committee a second, worse definition: something that’s true, looks bad, and we failed to predict as a PR problem.

"We're not clairvoyants"

That was Diversa's line to the PJC last Friday. ASIC alleges Diversa's members had around $300m sitting in First Guardian when it collapsed. Diversa's defence, as reported, was that it couldn't have seen it coming, that the fraud was Falcon's, the advice was the advisers', the platform was someone else's, and they’re not clairvoyants. Diversa has also cross-claimed against Praemium et al, budgeted $2m to fight ASIC's roughly $240m action, and didn’t give the PJC committee an estimate of what members lost.

Senator O'Neill's summary was four words: "All profit. No responsibility." ASIC's was three: the evidence "misses the point."

Nobody expects a trustee to be all knowing, but we do expect common sense. That's the standard the trustee wrote for itself, in its conflicts and investment governance policies, and the PJC is now reading back to us. Being judged against rules you wrote and didn't check isn’t bad luck. It's the natural consequence of treating a compliance framework as a fact about your conduct rather than a claim you must keep proving.

The bonus is the message

The second kind of fuct is a fact that's true and creates reputation risk you don't see coming. Professional Planner reported CEO Andrew Peterson received a $777k bonus in FY25, $1.7m total. This was the year members became victims, allegedly in part because of Diversa’s role. Someone just had to notice this, and hold them accountable in public, which a senator did, on camera, as First Guardian victims still wait on liquidators paying eight cents on the dollar.

Macquarie ($321m) and Netwealth ($128m), paid members back before anyone made them and aren't facing a penalty. Not everyone has that kind of money, but the point is their response posture was right.

So what? There are two ways to not find yourself in this sort of situation.

First, ask harder questions internally

Two questions for your next exec meeting. What do we say about ourselves that we've never tested? And what are the true, boring, approved facts in our accounts that look obscene next to a headline we can't control? The bonus, the fee, the dividend, the offsite. Find that stuff before others do.

Second, find gaps between rhetoric and reality

There’s a thinking tool we use called the rhetoric -> reality gap. If it’s big, that’s where your reputation dies. The bigger the gap between your rhetoric and other people’s experience of reality, the bigger your risk.

Best,

Carden | she/her (here’s why that matters @work)

PS. Diversa contests ASIC's allegations and the case is untested. I make no comment about the accuracy of the legal claims or reporting here! Reply if you'd like the one-page fact vs fuct test we use with boards.

On our radar:

The other big stories this week

Bathla collapse puts pressure on banks beyond private credit
Bathla’s $3.4bn collapse is spreading beyond private credit lenders, with concerns mounting over the more than 1,000 subcontractors owed money by the developer. Analysts warn the fallout could drive higher bad debts, tighter property lending and increased bank provisions ahead of reporting season.

Woollahra rezoning plan unlocks 9,400 new homes
NSW Labor has unveiled plans for up to 9,400 new homes in Sydney’s inner east, including towers of up to 34 storeys around Edgecliff and the future Woollahra station. The proposal has reignited the housing density debate, with supporters citing supply benefits and opponents warning of overdevelopment and infrastructure strain.

Former KPMG chief collects $4m payout as audit scandal deepens
Former KPMG CEO Andrew Yates has reportedly received a payout of around $4m after resigning during the firm’s audit scandal. The fallout continues to grow, with senior departures, lost client contracts and ongoing scrutiny of governance, auditor independence and firm culture.

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