The Australian Securities and Investments Commission (ASIC) has taken action to wind up the operators of a managed investment scheme that appears to have been involved in advising people to roll over their super into retail funds or SMSFs so as to invest in it.
The corporate regulator stated it had applied to the Federal Court for the appointment of liquidators to Falcon Capital Limited, the responsible entity for the First Guardian Master Fund, and for orders directing the liquidators to wind up First Guardian. The matter has been listed for hearing on 9 April.
ASIC stated that while its investigation into First Guardian was continuing, it appeared investors were called by lead generators and referred to personal financial advice providers who advised them to roll their superannuation assets into a retail choice super fund or an SMSF and then invest in First Guardian.
The new court action follows the granting of orders on 24 February freezing the assets of Falcon Capital, one of its directors, David Anderson, and First Guardian to protect investor funds while the investigation continued.
ASIC added it remains concerned about the management and operation of First Guardian and the associated risks to investors and withdrawals from First Guardian have been suspended with limited exceptions since 27 May 2024.
The regulator alleged around $274 million of First Guardian’s value arises from cash receivables in respect of which payments are many months late and more than $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.
Additionally, ASIC alleged First Guardian had invested in entities Anderson had an association with or financial interest in and Falcon appeared 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 they may have been misled about the security of their investment and likely returns.
ASIC added its application on 18 February to freeze the assets of two financial advisers, Ferras Merhi and Osama Saad, in regards to their connection with another managed investment scheme, the Shield Master Fund, which involved super rollover advice, was also due to their connection to the First Guardian Master Fund.
The involvement of advisers in providing superannuation rollover advice to clients sourced via cold calling has been flagged by ASIC as an area of concern and investigation given $480 million was invested in the Shield Master Fund via this process.
