ASIC probes advisers over First Guardian fund

The same group of advisers who spruiked now collapsed Shield Master Fund to superannuation investors, were also recommending now suspended First Guardian Master Fund.

First Guardian and Falcon Capital have ties to under-fire property developer Paul Chiodo. Picture: Alex Coppel.

Financial advisers under investigation for recommending investors put their savings into the Shield Master Fund, which collapsed last year, were also recommending clients invest in the First Guardian Master Fund, now suspended with its assets frozen by the Federal Court.

The Australian Securities & Investments Commission is investigating financial advisers and lead generators for their part in allegedly encouraging investors to switch out of established super funds and set up self-managed funds to put their savings in high-risk assets, including property developments.

The regulator last week said it was probing Melbourne-based financial adviser Ferras Merhi of Venture Egg Financial Services and Osama Saad, former director of Aus Super Compare, “in connection with its investigations concerning certain managed investment schemes including the Shield Master Fund”.

Mr Mehri, whose firm is an authorised representative of InterPrac, said the failures were with the platforms and trustees.

“As with Shield, (with First Guardian) I relied on the due diligence of the platforms, in this case EQT, Netwealth and Diversa, and its trustees. I further relied on SQM, which rated First Guardian at 3.75 as favourable investment grade,” he said.

“I’m fed up with carrying the can for those who failed to properly investigate the fund, its operations and its underlying assets,” Mr Mehri told The Australian, adding that he would consider joining any class action against the platforms.

Venture Egg has about 3,600 clients with $192m invested in First Guardian.

Failed advice firm United Global Capital (UGC) is also understood to have recommended clients buy into the suspended First Guardian fund. UGC’s licence was cancelled last year, and its sole director, Joel Hewish, has been banned from providing financial services for 10 years, in part for creating a culture of noncompliance and incompetence at UGC, according to the regulator. Mr Hewish is appealing the ban.

UGC separately has put a substantial burden on the broader financial advice industry. The annual levy paid by advisers to fund the Compensation Scheme of Last Resort jumped to $70m for fiscal 2026, with compensation estimates for UGC investors making up the bulk of that figure.

ASIC last week obtained interim orders freezing the assets of Falcon Capital, the First Guardian Master Fund and David Anderson. Falcon is the responsible entity for First Guardian and David Anderson is a director of Falcon. Mr Anderson, a co-founder of First Guardian, was a director of the fund until mid-February, according to documents lodged with the regulator in recent days.

The interim freezing orders, which ASIC said were to help protect investor funds while an investigation continued, come nine months after First Guardian suspended redemptions under the guise of a short-term “re­structure”.

As revealed exclusively by The Australian last month, First Guardian and Falcon Capital have ties to property developer Paul Chiodo, who is fighting allegations he spent millions of dollars of investor funds from the Shield Master Fund on personal ­expenses.

The court’s orders restrain Falcon and Mr Anderson from removing their property (including the property of First Guardian) from Australia; selling that property; incurring new liabilities, and withdrawing, transferring, disposing of or dealing with money held in bank accounts in which Falcon or Mr Anderson have an interest.

While Falcon Capital is First Guardian’s responsible entity, it was also previously the trustee of the Chiodo Diversified Property Fund. Chiodo Corporation’s founder Paul Chiodo is at the centre of a court case concerning the Shield Master Fund, now in liquidation, with investors in limbo over their savings.

According to court documents, First Guardian sold its position in the Chiodo Diversified Property Fund in March 2024 to Asia Pacific Property Holdings LLC. The sale came weeks after ASIC put interim stop orders on the Shield Master Fund. In late May, First Guardian told investors the fund would be temporarily suspended and would reopen for applications and redemptions by August 1. Further updates sought to explain the delays.

An update to members last month confirmed the fund had sold its position in the Chiodo Diversified Property Fund but was still awaiting the cash proceeds.