Miller Wealth in ASIC probe over $50m fund transfer to First Guardian as part of Venture Egg deal
Helmed by an unregistered advisor, Miller Wealth quietly moved $50m of former clients’ money into First Guardian as part of a backroom deal.
Financial planning firm Miller Wealth Group quietly moved $50m of clients’ money into First Guardian as part of a $1.5m deal to sell those same clients on to Ferras Merhi’s Venture Egg advice shop.
Miller Wealth, whose founder Clinton Miller ceased being a registered financial adviser in late 2021, made the mass transfers in April and May 2022 using Netwealth’s platform without triggering any red flags.
In the process, the firm locked hundreds of new clients into the stricken First Guardian fund, which has since collapsed and is being liquidated.
Just days prior, Mr Miller agreed to sell a portion of his firm’s client book to Venture Egg.
The transfers were a condition of the sale, The Australian understands.
While Mr Merhi paid a deposit for the client book in April, the balance of $950,000 wasn’t handed over until after Mr Miller confirmed the clients had been moved to First Guardian, in an email obtained by The Australian.
The client money that was moved across had previously been invested in run-of-the-mill exchange traded funds.
A spokesman for Mr Miller said that after the sale of his client book was finalised, the money was moved into First Guardian by Miller Wealth with the understanding that Venture Egg would take care of statements and records of advice to be sent to clients.
Mr Merhi disputes this, telling The Australian the investors were still Miller Wealth clients when they were moved into First Guardian and so it was up to Mr Miller and his qualified adviser on staff to get approval before their money was allocated to First Guardian.
Miller Wealth’s website is no longer active but it is still listed as a representative of financial planning firm InterPrac.
It is one of three InterPrac-licensed advice firms currently under investigation by the corporate regulator as part of its broader probe into the First Guardian collapse and the failure of another fund, the Shield Master Fund.
Venture Egg and a third advice firm, Reilly Financial, also operated under InterPrac’s licence at the relevant time.
InterPrac has been cutting ties those advisers; the licensee severed its relationship with Venture Egg at the end of May and is currently in the process of ridding itself of Reilly Financial.
The termination of the Miller Wealth Group relationship is also taking place, an InterPrac spokesman told The Australian.
“All advisers are responsible for their own product selection and portfolio construction recommendations. InterPrac does not influence their choice of investments but provides an approved product list for them to select from after undertaking their own due diligence,” the spokesman said.
As previously revealed by The Australian, InterPrac put First Guardian and Shield on its approved product list following a request by Mr Merhi, who knew the directors of both funds.
InterPrac, also under investigation, has been in the firing line as First Guardian and victims of another troubled fund, Shield, make claims for compensation through the ombudsman, the Australian Financial Complaints Authority.
Hundreds of claims have been filed against the firm, whose parent is ASX-listed Sequoia, but thousands more are likely. The value of the complaints received so far totals $22m.
All up, the 12,000 investors are caught up in the two fund failures and stand to lose up to $1bn in super savings.
Venture Egg and Mr Merhi have been at the centre of the Shield and First Guardian scandals, with the corporate regulator alleging Mr Merhi was paid millions of dollars by First Guardian to get more investors into the fund.
First Guardian is alleged to have paid at least $45m to marketers and lead generators between 2021 and 2023, with more than half of the money siphoned directly from First Guardian fund assets, according to the corporate regulator.
Mr Merhi separately operated another advice shop, FSGA, which held its own financial services licence.
Between Venture Egg and FSGA, Mr Merhi and his associates put more than 6700 investors into Shield and First Guardian, representing $226m and $234m allocated to Shield and First Guardian respectively, ASIC alleges.
First Guardian is accused by ASIC of mishandling investor money, putting many millions of dollars into companies chief executive David Anderson had a financial interest in and channelling hundreds of millions of dollars in offshore loans and investments.
Regulators are separately investigating superannuation trustees including ASX-listed Netwealth, Macquarie, Equity Trustees and Diversa over their role.
While ASIC has been leading the investigations, the prudential regulator has been poring over trustees’ due diligence processes and monitoring of funds on their platforms.
“The quality and soundness of trustees’ governance and ongoing oversight of investments offered via platforms is extremely important and is a key focus for APRA,” an APRA spokesman told The Australian.
“APRA is in the final stages of a comprehensive thematic assessment of platform trustee practices in relation to investment governance and strategic planning.”
APRA’s review has focused on nine trustees which steward 95 per cent of funds under management for platform products.
“APRA has sought extensive information, documentation, and data to inform our assessment. Key themes we are especially focused on include due diligence and monitoring for adding and removing investments, and level of reliance on third-party reviews,” the spokesman said.
Netwealth was contacted for comment.
