The Australian Securities and Investments Commission (ASIC) is currently investigating two frozen funds that have raised significant concerns due to the alleged distribution of tens of millions of dollars to “lead generators.” These entities have been accused of promoting high-risk investment schemes to unsuspecting consumers. The deputy chair of ASIC, Sarah Court, emphasized that the misconduct related to these rogue funds appears to be widespread and sophisticated, indicating that it is not merely the result of simple scams but rather a well-organized operation.
Court described these high-risk schemes as “industrial scale” operations characterized by their complexity and deliberate design. She highlighted that these schemes employ aggressive sales tactics to attract investors, often pressuring them through misleading claims about their existing superannuation funds or enticing offers to consolidate multiple accounts without any fees. Additionally, advertisements on social media platforms have been utilized to lure individuals into these schemes, with claims of retrieving lost superannuation or providing a “super health check.”
Given the deceptive nature of these tactics, Court stated it can be challenging even for seasoned investors to detect underlying problems in these promotions. She urged Australians to remain vigilant against high-pressure sales techniques and to be cautious of clickbait advertisements promising unrealistic returns. Court recommended that potential investors inquire about the commissions earned by call center operators who encourage them to switch funds, as well as the identity of the fund managers involved. She advised individuals to take their time before moving their superannuation from larger, established funds to these newer, potentially dubious investment groups.
In addition to their investigation into the funds and their operators, ASIC is also scrutinizing the reputable investment managers that have permitted these rogue funds to be promoted on their platforms. Court noted that some registered financial planners promoting these funds are associated with well-known investment managers such as Macquarie and Equity Trustees, thereby misleading consumers into assuming that these new schemes are being adequately supervised and vetted.
Ferras Merhi, the CEO of Venture Egg, is under investigation concerning his group’s alleged role in directing investors to the Shield Master Fund and First Guardian Scheme. Despite the allegations, Merhi maintains that he has engaged in no wrongdoing and claims ignorance regarding any improper oversight of the investments.
ASIC has already initiated legal proceedings against Merhi and his associate, Osama Saad, leaders of the financial planning group that recruited many investors into these dubious schemes. Both individuals have denied any misconduct and insist they had no awareness of the improper management of the funds. As the investigation unfolds, ASIC is also considering actions against the financial planners and lead generators involved in this high-risk investment landscape. This ongoing situation reflects broader concerns about the integrity and regulatory oversight within Australia’s financial services sector.
