Shield Master Fund investigations among ASIC’s ‘most complex’

In his opening address to Senate estimates on Thursday, Australian Securities and Investments Commission (ASIC) chair Joe Longo included court action against an adviser and former director in connection with its investigation into the Shield Master Fund among its “strong enforcement outcomes” already in 2025.

Following applications made ASIC, the Federal Court made interim orders freezing certain assets of Melbourne-based financial adviser Ferras Merhi and Osama Saad, former director of Aus Super Compare Pty Ltd (in liquidation) and Atlas Marketing Pty Ltd (in liquidation).

“ASIC is investigating Mr Merhi and various entities associated with him, in connection with its investigations concerning certain managed investment schemes including the Shield Master Fund. These investigations are ongoing,” ASIC said, adding in a separate announcement that the same is true of Saad.

Merhi controls Venture Egg Financial Services Pty Ltd and United Financial Advice Pty Ltd, trading as Venture Egg and Financial Services Group Australia Pty Ltd (FSGA).

Both Venture Egg and Merhi are authorised representatives of licensee InterPrac Financial Planning Pty Ltd. FSGA also holds an Australian Financial Services Licence (AFSL).

Saad was a director of Aus Super Compare until September 2024 and the sole director of Atlas until November 2024. Both entities were placed into liquidation in late 2024.

According to Longo on Thursday, the “investigations around the Shield Master Fund are among the most complex that ASIC is undertaking at the moment”.

“I think they're very serious for all Australians,” the chair said following questions from senator Barbara Pocock.

“The amount of money involved, ordinary Australians being talked into doing things that really ought not to have occurred. There really is misconduct.”

The Shield fund, which is a registered managed investment scheme with Keystone Asset Management as the responsible entity, has led to ASIC investigations related to a broad range of parties related to the investments, including financial advisers such as Merhi.

“We have extensive concerns relating to the possible mishandling of significant superannuation monies that have been invested into that scheme, and we have taken a large number of investigation actions relating to a range of entities and individuals associated with the scheme,” deputy chair Sarah Court told the Senate, though refraining from detailing specific entities.

“Suffice to say, we've taken multiple court actions to protect investor funds. We've frozen assets, we've obtained travel restraints, we've had receivers and managers appointed, and we are … still likely at the early stages of what is an extensive investigation.”

According to the ASIC deputy chair, the regulator has “stood up several teams of investigators to work on these matters”, which she added is “not the only matter like this we have on our books at the moment”.

“The kind of figures that we're concerned about here, and these have been publicly reported previously, are in the order of $480 million worth of investor funds and 5,800 investors potentially impacted. It's a major issue,” Court said.

She added: “We've been very keen to get out messages to say to potential investors in relation to their superannuation funds, be very cautious about transferring your superannuation funds into a self-managed super fund for the purposes of unrealistic property investment returns. These are industrial scale models that we are seeing.”

In February 2024, ASIC halted new offers of investments in Shield Master Fund and made interim stop orders on four product disclosure statements for Shield.

In June 2024, ASIC took action to secure the assets held within Shield. ASIC sought the appointment of Jason Tracy and Lucica Palaghia of Deloitte as receivers and managers of the property of KAM.

In December 2024, ASIC noted that the creditors of Keystone had resolved to wind up KAM and appoint Jason Tracy and Glen Kanevsky of Deloitte as joint and several liquidators.

“The investigation to date suggests that potential investors were called by lead generators and referred to personal financial advice providers who advised investors to roll their superannuation assets into a retail choice superannuation fund and then to invest part or all of their superannuation into Shield,” the regulator said in December.

As a result of this, ASIC said its investigation of the circumstances surrounding Shield include KAM and its directors and officers, the role of the superannuation trustees, the financial advisers who recommended investors invest in Shield, the lead generators, and others.

“It has come to ASIC’s attention that Venture Egg (a financial adviser who has advised clients to invest in Shield) has issued letters to investors dated 29 November 2024 and 2 December 2024,” ASIC added at the time.

“ASIC is concerned that the information in the letters is incomplete and some of the statements in the letters are inaccurate.”

In October, ASIC cancelled the AFSL of Queensland-based Next Generation Advice, which is in liquidation and had recommended investments that included the Global Capital Property Fund and the Shield Master Fund.

Earlier this month, ASIC commissioner Alan Kirkland said the regulator is continuing to see too many examples where advice leads to poor, if not devastating, outcomes for consumers.

“Our ongoing investigation into the Shield Master Fund is one such example, though regrettably it’s not an isolated one. It reflects a pattern of conduct we are seeing all too frequently,” Kirkland said.

“This pattern commonly involves telemarketers recruiting consumers before passing them onto advisers. These advisers then recommend that consumers withdraw their superannuation savings from a regulated fund and invest them, sometimes via an SMSF, into a high-risk property scheme or some other high-risk investment.”