The Australian Securities and Investments Commission (ASIC) has sought leave from the Federal Court in Australia to expand its existing proceeding against former financial adviser Ferras Merhi to allege that he "engaged in unconscionable conduct, failed to act in the best interests of clients, gave conflicted advice, and provided defective statements of advice whilst receiving millions of dollars".
The regulator will seek to allege that Merhi used marketing companies to push potential clients to his financial advice businesses, Venture Egg and Financial Services Group Australia, which is in liquidation.
Between 2020 and 2024, ASIC said that Merhi and advisers working for him allegedly advised clients to invest around AUD$296m of their superannuation into the First Guardian Master Fund and around AUD$230m into the Shield Master Fund.
In return, ASIC alleges Mr Merhi’s businesses received:
- nearly $18m in upfront advice fees
- more than $19m from entities associated with First Guardian for marketing First Guardian to clients
Both funds have now collapsed, leaving thousands of clients’ superannuation at risk.
"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," said Sarah Court, deputy chair of ASIC.
