The Australian Securities and Investments Commission (ASIC) has sought leave from the Federal Court to expand its existing proceeding against former financial adviser 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 will seek to allege Mr Merhi used marketing companies to push potential clients to his financial advice businesses, Venture Egg and Financial Services Group Australia (FSGA) (in liquidation).

Between 2020 and 2024, Mr Merhi and advisers working for him allegedly advised clients to invest around $296 million of their superannuation into the First Guardian Master Fund and around $230 million into the Shield Master Fund.

In return, ASIC alleges Mr 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.

Both funds have now collapsed, leaving thousands of clients’ superannuation at risk.

ASIC will also seek to allege Mr Merhi, Venture Egg Financial Services Pty Ltd and United Financial Advice Pty Ltd breached numerous financial adviser obligations which are aimed at protecting clients, and that their conduct and business model were unconscionable.

The regulator will seek to allege Mr 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 will also seek to allege Mr Merhi falsely represented that he had no vested interest in the recommended funds when, 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. 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 Court’s approval. If the Court gives approval, ASIC will seek injunctions prohibiting Mr Merhi from any involvement in a financial services business, the appointment of a receiver to Mr Merhi’s personal property, and provisional liquidators to Venture Egg Financial Services and United Financial Advice.

In February 2025, the Court made interim freezing orders over Mr Merhi’s property. These orders remain in place until 12 December 2025.

ASIC cancelled the Australian financial services licence of FSGA, effective 7 June 2025 and permanently banned its responsible manager.

In July 2025, the Court made travel restraint orders against Mr Merhi. Those orders prevent him from leaving or attempting to leave Australia until 12 December 2025, or until further order of the Court.