ASIC is suing licensee InterPrac, self-licensed advice firm MWL Financial Services and researcher SQM for failures in the collapse of the Shield and First Guardian master funds.
The corporate regulator announced on Thurday morning that InterPrac is being sued for its oversight failure of authorised representative Ferras Merhi and for relying on third-party researcher SQM.
“InterPrac is unable to provide further information at this time and will defend its position on such allegations vigorously,” a spokesperson for InterPrac told Professional Planner on Thursday morning.
InterPrac’s parent company, Sequoia Financial Group went into a trading halt on Thursday morning as its share price fell 12 per cent.
ASIC deputy chair Sarah Court said InterPrac’s alleged oversight and compliance failures exposed thousands of Australians to poor advice and significant financial risk.
“We allege that no competent financial adviser could have recommended Australians invest large amounts of their superannuation in these funds, and that InterPrac – as licensee – should have been alert and responsive to the significant risk this conduct posed to clients, but it failed on many levels,” Court said in the announcement on Thursday morning.
A statement released later that day from InterPrac to the ASX deflected blame to product failure, and argued that the licensee had fulfilled all obligations under the Corporations Act.
“The InterPrac board and support staff are committed to continue to act in clients’ best interests and take our compliance and governance obligations seriously,” Sequoia managing director Garry Crole said in the statement.
“We do recognise the impact on clients affected by the external investment product failure confirming InterPrac has cooperated fully with ASIC’s investigation.”
SQM is also being sued for providing misleading research reports about Shield that did not accurately depict the standard, quality, value or grade of Shield, and that reflected deficiencies in the processes SQM followed.
MWL Financial Services, which holds one of the licences already cancelled by ASIC in relation to the collapse of Shield, has also been taken to court along with the firm’s director, and a lead generator service tied to the group.
ASIC acts on InterPrac
ASIC alleged that critical oversight and compliance failures by InterPrac exposed thousands of Australians to poor financial advice and significant risks from Shield and First Guardian.
The regulator commenced civil penalty proceedings against InterPrac in the Federal Court for allegedly failing to ensure its former authorised representatives Venture Egg, run by Ferras Merhi, and Rhys Reilly Pty Ltd complied with their best interests obligations and for failing to have adequate risk management systems.
Together these representatives advised around 6843 clients to invest around $677 million of their superannuation savings into both funds.
ASIC alleges InterPrac failed to have an adequate process in place for approving financial products it allowed onto its approved product list, including Shield and First Guardian, and that it relied entirely on external research to add those funds to its approved investments list for advisers.
Furthermore, ASIC alleges that InterPrac also failed to respond appropriately to the use of lead generators Imperial Capital Group Australia and AGAT Business.
InterPrac is accused of failing to adequately respond to news that payments had been made to Merhi’s companies by entities associated with the Shield and First Guardian funds and that it didn’t enforce a hold on new investments into the funds despite acknowledgement by Crole there were issues with both products.
The licensee is also accused of not preventing the use of “negative consent”, where some clients’ super was invested into Shield or First Guardian without their knowledge or consent when their failure to respond to any changes to their investment strategy was considered to constitute approval.
ASIC was also concerned InterPrac failed to respond to significant inflows of investment into Shield and First Guardian and didn’t respond or impose meaningful consequences to their authorised representatives in response to serious compliance issues, including failings repeatedly identified in audits.
The licensee is also accused of failing to provide adequate responses to client complaints about the advice and instead relying on a template response, which often failed to consider the appropriateness of the advice.
InterPrac’s relationship with Merhi and Venture Egg ceased as of 31 May 2025 and with Rhys Reilly and Rhys Reilly Pty Ltd as of 15 August 2025.
ASIC has ongoing proceedings against Merhi and Osama Saad, the former director of two marketing/lead generation companies Aus Super Compare and Atlas Marketing, and has been investigating Rhys Reilly.
Cancelled AFSL taken to court
ASIC will allege in court that MWL operated a business model involving its former director Nicholas Maikousis and lead generator Imperial Capital Group Australia that provided inappropriate financial advice to clients to invest their superannuation into Shield.
Similar to other conflicted lead generator models related to the Shield and First Guardian collapse, ASIC will allege Imperial referred potential clients to MWL under the misrepresentation clients would receive tailored financial advice but instead were funnelled into Shield as a pre-selected investment.
The regulator has alleged that between May 2022 and February 2024 nine MWL representatives advised at least 556 clients to make initial investments about $114 million of their superannuation into the fund.
It will be alleged that MWL received advice fees charged to clients for preparing Statements of Advice recommending investment in Shield while Imperial received approximately $12.8 million in payments from entities associated with Shield for client referrals and the promotion of the fund.
ASIC will accuse the business of failing to take steps to ensure its advisers acted in the best interests of clients when they recommended clients roll over all their super as the pre-selected investment option, and failed to have in place adequate arrangements to manage conflicts of interest.
MWL director Nicholas Maikousis will be accused of being involved in MWL’s alleged contraventions of its general licensee obligations and its obligation to take reasonable steps to ensure its authorised representatives complied with their best interests and related duties.
ASIC cancelled MWL’s license in August, and the deadline for victims to lodge complaints with AFCA is 26 August 2026.
Because MWL is in administration, ASIC’s application to make these allegations is subject to the court’s approval or by consent of the administrators.
If the case is allowed to proceed, ASIC will seek declarations and civil penalties against all defendants, and orders disqualifying Maikousis from managing corporations.
ASIC has already banned six MWL advisers this year: Wade Lance Spooner and Matthew Simon Bradley for eight years each; Rocco D’Amelio for seven years; Robert Crossing for six years; and Isaac Jacob McQueen for four years.
Jovan Videkanic, an adviser for MWL and United Global Capital, was banned for seven years for inappropriate advice related to the Global Capital Property Fund and Shield.
