ASIC moves further on First Guardian MIS

The Australian Security and Investments Commission (ASIC’s) investigation of the Shield Funds and other managed investment schemes took another step late on Monday when the regulator applied for the appointment of liquidators to Falcon Capital Limited, the responsible entity for the First Guardian Master Fund.

In doing so, ASIC has indicated that it has further to move with respect to moving against those responsible for the financial advice provided around the Shield Funds and those who employed the lead generators which led to the provision of that advice.

ASIC explained the background of its move against First Guardian, noting that it is a managed investment scheme (MIS) and the legal processes it had already put in motion.

It noted that n 18 February, the Federal Court made interim orders on the application of ASIC freezing certain assets of financial adviser, Ferras Merhi in connection with its investigations concerning certain managed investment schemes including First Guardian.

“Mr Merhi controls Venture Egg Financial Services Pty Ltd (formerly Ferras Merhi Pty Ltd) & United Financial Advice Pty Ltd, trading as Venture Egg and Financial Services Group Australia Pty Ltd (FSGA). Both Venture Egg and Mr Merhi are authorised representatives of Interprac Financial Planning Pty Ltd, an Australian Financial Services Licence (AFSL) holder. FSGA also holds an AFSL,” ASIC said.

“On 18 February 2025, the Federal Court made interim orders on the application of ASIC freezing certain assets of Osama Saad, former director of Aus Super Compare Pty Ltd (in liquidation) and Atlas Marketing Pty Ltd (in liquidation) in connection with its investigations concerning certain managed investment schemes including First Guardian.

On 24 February 2025, the Federal Court made interim orders freezing the assets of Falcon, First Guardian and Mr Anderson. Those orders were extended by the Federal Court on 27 February, 12 March 2025 and 17 March 2025.

On 11 March 2025, Falcon published an update to its investors concerning the freezing orders obtained by ASIC and stated it was currently working with its advisers to develop a plan to implement an orderly wind down of First Guardian.

ASIC said it is concerned about the management and operation of First Guardian and the associated risk to investors, noting that withdrawals from First Guardian have been suspended with limited exceptions since May last year.

ASIC has alleged that:

• approximately $274 million of First Guardian’s value arises from cash receivables in respect of which payments are many months late;
• in excess of $23 million of First Guardian’s assets appear to have been paid to entities purportedly providing marketing services which appears contrary to representations made to investors;
• First Guardian has invested in entities which Mr Anderson had an association with or financial interest in and Falcon appears to have failed to recognise and manage consequent conflicts of interest;
• investors may have been exposed to classes of assets that differ from what was disclosed to them at the time of making their investment; and
• investors may have been misled about the security of their investment and likely returns.