The Australian Securities and Investments Commission (ASIC) is looking to expand its actions against a former financial adviser who recommended clients invest in the First Guardian Master Fund and Shield Master Fund, netting nearly $40 million in advice and marketing fees.
The corporate regulator stated it had asked the Federal Court for permission to expand its current proceedings against former financial adviser Ferras Merhi, who operated two advice business, Venture Egg Financial Services and Financial Services Group Australia (FSGA).
In doing so it will allege Merhi engaged in unconscionable conduct, failed to act in the best interests of clients, gave conflicted advice and provided defective statements of advice while receiving millions of dollars, and that he used marketing companies to push potential clients to his financial advice businesses.
“Between 2020 and 2024, Mr Merhi and advisers working for him allegedly advised clients to invest around $296 million of their superannuation into the First Guardian Master Fund and around $230 million into the Shield Master Fund,” ASIC stated.
“In return, ASIC alleges Mr Merhi’s businesses received nearly $18 million in upfront advice fees and more than $19 million from entities associated with First Guardian for marketing First Guardian to clients.”
ASIC is also looking to allege Merhi, Venture Egg Financial Services and parent company United Financial Advice breached a range of financial adviser obligations that are aimed at protecting clients and that their conduct and business model were unconscionable.
Additionally, the regulator will pursue an allegation Merhi provided clients with statements of advice that contained false or misleading statements about the nature of the Shield Master Fund by implying it was operated by Macquarie, and he falsely stated he had no vested interest in the recommended funds when he was involved in marketing them and received millions of dollars for marketing First Guardian.
“Clients allegedly were led to believe they were receiving independent, tailored advice. Instead, they were allegedly channelled into predetermined investment portfolios that were highly risky and served the financial interests of Mr Merhi and his businesses,” ASIC added.
The application to make these allegations is subject to court approval and if granted, he regulator will look to apply injunctions prohibiting Merhi from any involvement in a financial services business and the appointment of a receiver to his personal property and provisional liquidators to Venture Egg Financial Services and United Financial Advice.
Both the First Guardian and Shield master funds have collapsed, with ASIC investigations continuing, but it has already taken specific action against Merhi when in February 2025 the court made interim freezing orders over his property and the regulator cancelled FSGA’s Australian financial services licence.
