Former MWL Financial Services financial adviser David Lofthouse has been banned by ASIC for three years for breaching best interests duty by advising clients to roll over their superannuation into the Shield Master Fund.
ASIC announced the banning on Tuesday morning, saying that Lofthouse advised six clients to invest at least 75 per cent of their superannuation savings into the High Growth class or the Growth class of Shield.
“The Shield Master Fund was a new financial product, with no meaningful track record, was not intended to be a complete investment program and had conflicts of interest tainting its governance,” the regulator said in a media release.
Lofthouse was previously authorised by MWL from 10 August 2022 to 25 November 2022.
He’s the ninth MWL adviser to be banned by the regulator since enforcement action in the aftermath of the Shield and First Guardian collapse commenced.
ASIC has banned MWL advisers Wade Lance Spooner and Matthew Simon Bradley (eight years), Rocco D’Amelio, Jovan Videkanic and Louis Van Coppenhagen (seven years), Robert Crossing (six years), and Isaac Jacob McQueen and Neil McPherson (four years).
Videkanic was an adviser for United Global Capital before joining MWL and Van Coppenhagen was UGC’s head of advice before joining MWL.
ASIC has also commenced legal proceedings against MWL, its former director Nicholas Maikousis and lead-generation service Imperial Capital Group.
Maikousis has been banned by ASIC for 10 years and compliance manager Robert John Tohill has been banned for five years.
ASIC issued product stop orders on Shield in February 2024 and has since launched court proceedings against the fund, its directors and responsible entity (Keystone Asset Management), along with First Guardian, which has also been implicated in the $1 billion collapse.
Investments in Shield and First Guardian grew due to a sophisticated network of lead generators that contacted people who used online “superannuation health check” advertisements and used high-pressure sales tactics to refer them to financial advisers.
ASIC acted against the Shield and First Guardian funds over concerns investor money was being misused on high-risk investments, pet projects of the directors and personal expenses. Court proceedings against both funds are ongoing.
The regulator has cancelled the licenses of UGC, Financial Services Group Australia and Next Generation Advice for their role in distributing the funds and all are insolvent.
The Australian Financial Complaints Authority gave indefinite extensions to those insolvent licensees due to concerns that investors impacted by the $1 billion collapse may not have had a chance to lodge a complaint.
InterPrac Financial Planning is the only licensee implicated that hasn’t had its license cancelled by ASIC but has been taken to the court by the regulator.
The licensee was owned by ASX-listed Sequoia Financial Group who sold it Conquest Investment Partners last month, citing platforms blacklisting its authorised representatives as the primary reason it wasn’t commercially viable for the group to continue its ownership.
InterPrac authorised Ferras Merhi – who also ran FSGA – and Rhys Reilly who ASIC has treated as the main advisers in its investigation into the collapse of the funds.
ASIC commenced proceedings against Merhi, alleging he signed 6000 Statements of Advice within a three-year period and used marketing companies to push potential clients to his financial advice businesses while receiving nearly $18 million in upfront advice fees and $19 million from entities associated with the funds to market them.
