ASIC Escalates Action Against Adviser Over $526M Superannuation Misconduct

Australia's corporate regulator has significantly widened its Federal Court proceedings against former financial adviser Ferras Merhi, alleging unconscionable conduct, conflicted remuneration, and systematically defective advice that funnelled approximately $526 million of client superannuation savings into two high-risk managed funds. For accounting firms, auditors, and compliance officers serving Australian financial services licensees, this case is a pointed reminder of how conduct and documentation failures can trigger cascading regulatory consequences across an entire advice network.

What ASIC Is Now Alleging

ASIC sought leave from the Federal Court to expand its existing proceedings, adding new allegations that go well beyond the original scope. The regulator alleges Mr Merhi used marketing companies to direct prospective clients toward his advice businesses, Venture Egg Financial Services Pty Ltd and Financial Services Group Australia Pty Ltd (FSGA), which is now in liquidation.

The Core Allegations at a Glance

Between 2020 and 2024, Mr Merhi and advisers under his direction allegedly recommended clients invest around $296 million of superannuation into the First Guardian Master Fund and roughly $230 million into the Shield Master Fund. ASIC contends that Mr Merhi received more than $19 million from entities associated with First Guardian for marketing the fund to those same clients, while telling clients he had no vested interest in the funds he was recommending.

The regulator further alleges that statements of advice provided to clients contained false or misleading descriptions of the Shield Master Fund, specifically that its presentation implied an association with Macquarie that did not exist. Clients were allegedly led to believe they were receiving independent, personalised advice. In practice, ASIC claims, they were being channelled into pre-selected, high-risk portfolios that served Mr Merhi's financial interests rather than their own.

Statutory Provisions in Play

ASIC's expanded action relies on several provisions of the Corporations Act 2001 and the ASIC Act 2001. Key alleged contraventions include:

• Section 12CB of the ASIC Act: unconscionable conduct in connection with the supply or possible supply of financial services.
• Sections 961B and 961G of the Corporations Act: failure to act in the best interests of clients and to provide appropriate advice.
• Section 961J: providing advice affected by a conflict of interest.
• Section 961H: failure to provide a statement of advice that complied with legislative requirements.
• Section 961L: FSGA's alleged failure to ensure its representatives met their best-interest obligations.

Procedural Chronology and Current Status

The case has moved through the Federal Court across multiple hearing dates, and the procedural record matters for firms tracking enforcement timelines.

Key Court Milestones

In February 2025, the Court made interim freezing orders over Mr Merhi's property. By July 2025, travel restraint orders were added, preventing him from leaving Australia. ASIC cancelled FSGA's Australian Financial Services Licence effective 7 June 2025 and permanently banned its responsible manager.

In September 2025, the Court granted ASIC leave to expand the proceedings and joined FSGA, Venture Egg Financial Services, and United Financial Advice as additional parties. On 25 March 2026, following ASIC's winding-up applications, the Court ordered both Venture Egg Financial Services and United Financial Advice to be wound up on just and equitable grounds, appointing Ms Renee Sarah Di Carlo as liquidator to each. The Court also granted ASIC leave to pursue pecuniary penalties against both entities, subject to undertakings limiting recovery steps that could affect creditors.

Most recently, on 15 June 2026, the Court extended Mr Merhi's travel restraint orders with his consent, keeping him in Australia until at least 11 November 2026. The next case management hearing is listed for 29 October 2026.

ASIC is seeking injunctions prohibiting Mr Merhi from any future involvement in a financial services business, the appointment of a receiver over his personal property, and pecuniary penalties. All relief remains subject to further court determination.

Compliance Signals for Accounting Firms and Auditors

This case surfaces several compliance pressure points that are directly relevant to firms advising Australian financial services licensees, conducting AFSL audits, or using crypto accounting software and digital asset accounting software to support client-level record-keeping within superannuation structures.

Conflicted Remuneration Documentation

The central factual issue in this matter is undisclosed, large-scale marketing payments flowing from product issuers to an advice network that was simultaneously holding itself out as independent. For compliance teams, this underscores the need for complete remuneration mapping across all referral, marketing, and product distribution arrangements. Any relationship where a fee, rebate, or volume incentive is linked to product placement must be disclosed and, where required, banned or managed under the conflicted remuneration regime in Part 7.7A of the Corporations Act.

Statement of Advice Integrity

ASIC's allegation that Statements of Advice contained false or misleading statements about a fund's operator is a documentation failure, not merely a conduct failure. Auditors reviewing advice files should be checking that product descriptions align precisely with offer documents and ASIC-registered information, that no implied endorsements or associations appear that are not substantiated, and that the personalisation of advice is genuine rather than template-driven.

Best Interests Duty Across Advice Networks

Section 961L places an affirmative obligation on the licensee, not just individual advisers, to ensure representatives comply with best-interest obligations. ASIC's allegation against FSGA on this point is a clear signal that regulators will look up the corporate chain. For accounting firms auditing or providing compliance services to licensees with large authorised representative networks, assessing the firm's supervision and monitoring systems is essential, not optional.

ASIC's Deputy Chair Sarah Court framed the enforcement approach plainly: this type of conduct, in the regulator's view, exploits superannuation savings and can devastate people's lives. That framing signals ASIC will continue prioritising superannuation-related misconduct in its enforcement pipeline. This pattern aligns with broader trends in regulatory escalation: see also ASIC's receiver appointment over Cotton and First Mutual Private Equity as another recent example of the regulator acting swiftly to freeze and recover investor funds. Internationally, the same enforcement philosophy is visible in cases like how regulators are charging deduction fraud facilitators, where professional intermediaries face personal liability for enabling client harm.

Client-Facing Considerations: AFCA Complaints

ASIC has directed affected clients of Mr Merhi, Venture Egg, or FSGA to lodge complaints with the Australian Financial Complaints Authority (AFCA). FSGA remains an AFCA member. ASIC has noted that previous complaint deadlines no longer apply at this time, though lodging promptly is still advisable. AFCA's service is free for consumers.

For accounting firms whose clients hold superannuation interests that were directed through these entities, advising on the AFCA pathway is a practical step. The regulator has also issued a consumer alert warning about complex, high-risk schemes targeting retirement savings and directs consumers to ASIC's MoneySmart resources.

What Firms Should Do Now

This enforcement action is still live. The next case management hearing is October 2026, and penalty proceedings are expected to follow. Firms should:

• Review any existing or prospective client relationships involving authorised representative networks that include product marketing arrangements.
• Confirm that AFSL audit programs assess Section 961L licensee-level supervision obligations, not just individual adviser conduct.
• Check that Statements of Advice templates and generation processes include controls preventing misleading product descriptions, particularly where third-party fund names or institutional associations appear.
• For firms using crypto accounting software or digital asset accounting software in superannuation-adjacent structures, ensure that the audit trail for fee flows and remuneration is clear, complete, and reconcilable to disclosure documents.
• Monitor ASIC's dedicated webpages for First Guardian and Shield Master Fund for material updates as the October 2026 hearing approaches.

Source: Australian Securities and Investments Commission (ASIC)