ASIC seeks liquidators for Falcon Capital after freezing assets

The Australian Securities and Investments Commission (ASIC) has sought orders to appoint liquidators to Melbourne-based Falcon Capital Limited and wind up its First Guardian Master Fund, after freezing assets last month to help protect investor funds amidst an amidst an investigation into the managed investment scheme.

In February the corporate watchdog secured interim orders freezing the assets of the two entities, and has now applied to the Federal Court to have liquidators appointed.

ASIC is also seeking the appointment of a receiver and manager to the personal property of Falcon Capital director David Anderson, of Hawthorn, who is one of three directors in the company and was included in the recent asset freeze orders.

The regulator has raised concerns about the management and operation of First Guardian and the associated risks to investors, with withdrawals from First Guardian suspended with limited exceptions since May 2024.

ASIC alleges that approximately $274 million of First Guardian’s value arises from cash receivables whereby payments are "many months late", and that more than $23 million of First Guardian’s assets appear to have been paid to entities purportedly providing marketing services.

The watchdog alleges the latter appears contrary to representations made to investors, and that Falcon appears to have failed to recognise and manage conflicts of interest arising from investments in which Anderson has an association or financial interest.

It is also alleged that 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 that investors may have been misled about the security of their investment and likely returns.

The matter has been listed for hearing on 9 April 2025.

"ASIC’s investigation of First Guardian is continuing. ASIC’s investigation to date suggests that many 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 superannuation fund and then invest into First Guardian," the watchdog stated.

"Some consumers received advice to set up self-managed superannuation funds (SMSFs) to facilitate investments into First Guardian."

Withdrawals from First Guardian have been suspended with limited exceptions since May 2024.

Around a week prior to the freezing of First Guardian's assets, 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.