InterPrac halted Shield and First Guardian inflows hours after Macquarie shut off Venture Egg, then it let First Guardian back in

Hours after Macquarie shut off Venture Egg from its super platform in mid-2023, the advice firm’s licensee InterPrac ordered all inflows into First Guardian and Shield to cease. But two months later, InterPrac took the halt off First Guardian.

Falcon Capital co-founder Simon Selimaj, developer Paul Chiodo and former First Guardian CEO David Anderson.

Hours after Macquarie cut off adviser Venture Egg from its superannuation platform in July 2023, the advice firm’s licensee, InterPrac Financial Planning, ordered all client inflows into First Guardian and Shield funds to cease.

Two months later, InterPrac removed the suspension on First Guardian, allowing advisers to put more client money into the ultimately failed strategy, but retained the pause on Shield, according to internal correspondence seen by The Australian.

And, despite the July-August-September halt on First Guardian and the even longer suspension of Shield, The Australian has seen evidence suggesting at least one Venture Egg client had their superannuation savings moved into both funds during the lockout period.

About 12,000 investors stand to lose just shy of $1bn of super savings from the combined fund failures.

After making a complaint to InterPrac, the client was told that the move to shift a portion of their super into Shield in September — when the fund was notionally on its suspended list pending further analysis — was “appropriate”.

“In September 2023 Venture Egg made the decision to make changes to your portfolio as the Shield Master Fund and First Guardian were not initially available on the NQ platform but were stapples (sic) of Venture Egg’s investment portfolios on multiple platforms,” InterPrac’s head of compliance operations Steven Kallona wrote in January in response to the client’s complaint.

The investments were made on August 31 and September 1, according to the client’s statement.

Virtually all of the money invested into First Guardian went to illiquid assets, loans to related parties and even a $500,000 Lamborghini for its responsible entity, Falcon Capital.

“Shield and First Guardian showed significantly above average performance for their price point, also showing a negative correlation with each other (ideal when building a diversified investment portfolio) and were available products on the approved product list for both Interprac and NQ Super (approved by Equity Trustees),” Mr Kallona said in the letter seen by The Australian.

“With regards to the advice you received in September 2023 to switch part of your superannuation funds into the Shield Master Fund, our investigation has found that this investment was appropriate at the time,” he wrote.

At the time of Mr Kallona’s letter, First Guardian redemptions had been suspended but the fund’s responsible entity, Falcon Capital, was not yet in liquidation.

The client, who declined to be named and has super savings still locked up in the failed Shield and First Guardian funds, told The Australian they had no record of any conversation with Venture Egg about the prospect of new investments and did not approve the switch.

‘All inflows are to cease’

“As of the 11th of July, all inflows in First Guardian are to cease,” InterPrac’s Mr Kallona wrote on behalf of CEO Garry Crole on the afternoon of July 7, 2023.

“The Investment Committee has decided to conduct further analysis into the fund at the next Investment Committee meeting,” he added.

A second email with near-identical wording was sent about Shield.

Earlier that same day, Macquarie, which runs a superannuation platform used by financial advisers, had issued instructions that no further applications from Venture Egg were to be processed.

Macquarie’s concerns are understood to have been triggered by the volume of inflows coming into Shield as well as the cookie-cutter appearance of the advice provided to clients.

Venture Egg was run by Ferras Merhi, who is now under investigation by ASIC. Mr Merhi ran two advice shops, Venture Egg and Financial Services Group Australia (FSGA). FSGA is now in liquidation, while InterPrac cut ties with Venture Egg in late May this year.

Between the two advice firms, Mr Merhi and his teams put more than 6000 of the 12000 affected investors into Shield and First Guardian, The Australian understands.

During this same period, Mr Merhi was also allegedly paid millions of dollars by way of marketing fees through another of his businesses.

InterPrac last week told The Australian it put a halt on the two funds in mid-2023 “once unusual volumes were observed” but said it did not inform ASIC at the time because “there was no evidence of any inappropriate management of the said funds”.

Correspondence seen by The Australian shows the firm’s boss Mr Crole, who is also CEO of ASX-listed Sequoia Financial, in September 2023 instructed that the halt on First Guardian inflows be removed.

InterPrac provided a statement to The Australian saying it removed the ‘hold’ on First Guardian for new business in September “as the SQM Ratings and Product platforms did not highlight any ongoing concerns to validate further suspension”.

SQM is a provider of ratings and recommendations on investment products used by planners. InterPrac is currently under investigation by the corporate regulator over whether it contravened the law in relation to Shield and First Guardian.

“In respect to Shield we are awaiting an update from SQM to see if it holds its rating,” Mr Crole wrote in the September 5 email.

“We are advised the review should become available within the next 45 days, and note should that review come out negative we may be inclined to review this decision once again.

“In the meantime, I would encourage a maximum weighting in any Shield portfolio to a maximum of 40 per cent at this point in time awaiting the SQM review process,” he wrote.

Venture Egg’s Mr Merhi said he had no knowledge of clients being tipped into Shield and First Guardian during the lock out period, and that he did not follow the September recommendation to reduce the Shield weighting in his clients’ portfolios because he was waiting for SQM’s research opinion.

Shield: From FUM of $82m to $446m in a year

Both Shield and First Guardian saw massive spikes in flows from 2022, much of it from the clients of Venture Egg and another InterPrac-authorised advice house, Reilly Financial.

Pictured are James Hird (top left), Garry Crole (bottom left) and Ferras Merhi. Euree Asset Management is run by Mr Hird, while Mr Crole sits on its board. Mr Crole also runs InterPrac, which was the licensee for advice firm Venture Egg. Mr Merhi ran Venture Egg and invested client money into Euree.

First Guardian had funds under management of $190m at the end of December 2021. By November 2022 its FUM had more than doubled to $406m.

Shield’s FUM rise was even more stark: The fund had $82m in FUM in September 2022. A year later this had grown to $446m.

An investigation by The Australian found that in some cases, financial advisers tipped clients into the Shield and First Guardian funds without their knowledge, listing one set of investments on statements of advice before switching investor money into the two funds and a third fund, Euree Asset Management, run by former footballer James Hird.

ASX-listed Sequoia Financial owns InterPrac and also has a 20 per cent stake in Euree, a multi-asset fund that counts InterPrac’s Mr Crole as a director and Mr Hird as its managing director. Euree has said it is a top performing fund and all redemption requests were being honoured. The Australian is not suggesting any wrongdoing by Euree.

Questions over InterPrac exposure 

InterPrac is now facing significant exposure to the Shield and First Guardian collapses, with thousands of investors expected to submit claims to the complaints ombudsman, AFCA. If AFCA finds in their favour, InterPrac, as the licensee for Venture Egg and Reilly Financial, could be liable to pay out hundreds of millions of dollars.

This raises the question of liability for ASX-listed Sequoia, which has a market cap of about $44m.

“The company’s policy is not to comment on any customers specific disputes that are currently in progress.Any member complaint is best handled through the Australian Financial Complaints Authority or directly to InterPrac FP, the adviser or the super fund itself where the customer invested,” InterPrac said on Sunday.

Sequoia, meanwhile, “is aware of its continuous disclosure obligations and made a market announcement on 7 April 2025. The company continues to observe its disclosure obligations in accordance with the ASX disclosure rules.”

Sequoia is due to report its full-year results next month.

An ASIC spokesman said the ASX was responsible for querying listed entities under their continuous disclosure obligations. “ASIC is aware of the concern raised and is monitoring the situation,” the spokesman said.

Originally published as InterPrac halted Shield and First Guardian inflows hours after Macquarie shut off Venture Egg, then it let First Guardian back in