Corporate watchdog sues after super millions risked
Australia’s corporate regulator is accusing a financial planning firm of “industrial-scale misconduct” by exposing nearly 7,000 investors to dodgy super funds.
InterPrac is accused of recommending 6,843 clients invest nearly $677 million in two now-collapsed funds, while failing to ensure that the representatives they authorized complied with the law.
“No competent financial advisor would recommend investing in Shield or First Guardian (Master Funds),” the Australian Securities and Investments Commission (ASIC) said in Federal Court documents filed on Wednesday.
Both funds allegedly charged exorbitant fees, made opaque investments, and paid millions of dollars to their boss, Ferras Merhi, a former authorized representative of Venture Egg and InterPrac.
According to court documents, Mr. Merhi told InterPrac in June 2024 that companies he controlled received approximately $20 million from two funds.
“Despite this, InterPrac allowed Venture Egg and Merhi to remain authorized representatives until 31 May 2025,” ASIC said.
InterPrac allegedly relied solely on external research before approving Shield and First Guardian for advisors, and failed to follow through despite a temporary pause on new investments.
Investors may not have even agreed to their super savings being transferred to risky funds after InterPrac allowed Venture Egg to use “negative approval” to switch portfolios.
The app allows advisors to adjust their clients’ investments by issuing a statement stating that the client will consent unless expressly stated otherwise.
InterPrac has been contacted for comment.
The collapse of Shield and First Guardian has been one of ASIC’s most complex cases, and the regulator said more than 40 investigators were working full-time to bring those responsible for the losses to justice.
“What we are talking about here is industrial-scale abuse involving a range of players,” ASIC deputy chairman Sarah Court said in a statement on Wednesday.
“We’re working on these in a very methodical way to make sure we’re holding these companies and individuals accountable.”
The regulator is also taking legal action against fellow advice licensee MWL and research house SQM for their role in duping unsuspecting customers.
ASIC launched separate proceedings against Mr Merhi, alleging he engaged in unconscionable behavior and failed to act in the best interests of clients when taking millions of dollars.
Persons who have invested in Shield or First Guardian should contact the relevant liquidators for updates on the recovery of investments and may have the right to lodge a complaint with them. Australian Financial Complaints Authority.
The case against InterPrac will return to the Federal Court at a later date.
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