ASIC turns up heat on financial adviser alleging $37m windfall from failed Guardian and Shield funds

The Australian Securities and Investments Commission has sought leave from the Federal Court to expand its existing proceeding against Ferras Merhi to allege he 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.

ASIC is alleging that Merhi used marketing companies to push potential clients to his financial advice businesses, Venture Egg and Financial Services Group Australia (FSGA), which is now in liquidation.

ASIC cancelled the Australian Financial Services Licence of FSGA on 7 June 2025 and permanently banned its responsible manager.

The latest allegations focus on the period between 2020 and 2024 when ASIC says Merhi and advisers working for him allegedly advised clients to invest around $296 million of their superannuation into First Guardian and around $230 million into Shield.

In return, ASIC alleges 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.

First Guardian and Shield managed a combined $1.07 billion in superannuation investments for almost 12,000 Australians before collapsing this year.

ASIC’s deputy chair Sarah Court says the action against Merhi is the latest in ongoing enforcement activity to clamp down on misconduct that the regulator says exploits superannuation savings.

“This type of conduct doesn’t just undermine the integrity of the financial advice and superannuation industries, it can have a devastating impact on people’s lives,” says Court.

ASIC is alleging that Merhi, Venture Egg Financial Services and United Financial Advice breached “numerous financial adviser obligations” which the regulator says are aimed at protecting clients. It is also alleging that the conduct and the business model were “unconscionable”.

ASIC alleges that Merhi provided clients with statements of advice which contained false or misleading statements about the nature of the Shield Master Fund by implying it was operated by Macquarie.

ASIC also claims Merhi falsely represented that he had no vested interest in the recommended funds when the regulator says that “in reality he was involved in marketing both schemes and received tens of millions of dollars for marketing First Guardian”.

“Clients allegedly were led to believe they were receiving independent, tailored advice,” says ASIC.

“Instead, they were allegedly channelled into pre-determined investment portfolios that were highly risky and served the financial interests of Mr Merhi and his businesses.”

ASIC’s application to make these allegations is subject to the Federal Court’s approval.

If the court grants approval, ASIC says it will seek injunctions prohibiting Merhi from any involvement in a financial services business, the appointment of a receiver to Merhi’s personal property, and provisional liquidators to Venture Egg Financial Services and United Financial Advice.

In February this year, the Federal Court made interim freezing orders over Merhi’s property with these orders to remain in place until 12 December 2025.

In July this year, the court also made travel restraint orders against Merhi, preventing him from leaving or attempting to leave Australia until 12 December 2025.

ASIC says it has taken a number of actions to freeze assets and restrain travel of individuals associated with ASIC’s investigations into the circumstances leading to the collapse of Shield and First Guardian.

The regulator last week announced it was suing Equity Trustees Superannuation over alleged oversight failures at the collapsed Shield Master Fund in the first salvo against the superannuation sector for collectively putting at risk $1.2 billion in retirement savings.