February 28, 2025, The Australian Securities and Investments Commission (ASIC) has identified the investigation into the Shield Master Fund as one of its most complex and high-priority cases. During Senate estimates on Thursday, ASIC Chair Joe Longo provided an update on the regulator’s efforts, including legal action against financial adviser Ferras Merhi and former Aus Super Compare director Osama Saad in connection with the ongoing probe.
Legal Action and Asset Freezes
As part of the investigation, the Federal Court issued interim orders to freeze the assets of both Merhi and Saad. Merhi, who controls multiple financial services firms including Venture Egg Financial Services Pty Ltd and Financial Services Group Australia Pty Ltd (FSGA), is under scrutiny for his involvement with the Shield Master Fund. Saad, who was a director of two companies now in liquidation—Aus Super Compare and Atlas Marketing Pty Ltd—was also linked to the investigation.
ASIC’s investigation into the Shield Master Fund, which is managed by Keystone Asset Management (KAM), spans multiple parties including financial advisers, superannuation trustees, and the role of lead generators. The fund has drawn attention due to its high-risk nature, with concerns over the handling of significant superannuation investments. ASIC has taken multiple enforcement actions, including appointing receivers, freezing assets, and seeking travel restrictions to protect investors.
Warnings About Unrealistic Investment Returns
During the Senate hearing, ASIC’s Deputy Chair Sarah Court highlighted the scale of the issue, noting that the Shield Master Fund involved approximately $480 million in investor funds, impacting around 5,800 investors. Court emphasized the importance of caution when considering superannuation transfers for property investments, particularly when the promised returns appear unrealistic.
“We’ve been very clear in our message to Australians: be cautious about transferring your superannuation funds into self-managed super funds for speculative property investments. These schemes are industrial-scale models that involve significant risks,” Court stated.
The investigation has raised alarms over the practice of using telemarketing to recruit consumers, who were then advised to roll over their superannuation funds into high-risk property schemes, often involving self-managed superannuation funds (SMSFs). ASIC has expressed concern about the advice provided by financial advisers linked to these schemes, which often led to poor or disastrous financial outcomes for clients.
Broader Implications for the Financial Advice Industry
ASIC has been increasingly vocal about the risks posed by certain financial advice practices, which have resulted in significant losses for investors. In December 2024, the regulator took action against Queensland-based Next Generation Advice, which had also recommended investments in the Shield Master Fund, before the firm was placed into liquidation.
ASIC Commissioner Alan Kirkland recently pointed out that the investigation into the Shield Master Fund is not an isolated incident. “This case reflects a troubling pattern we are seeing across the industry, where consumers are steered toward high-risk investments after being contacted by lead generators and misled by advisers,” he said.
In response to these ongoing issues, ASIC is intensifying its focus on financial advisers and entities that facilitate these schemes, with a broader crackdown on misconduct in the financial services industry.
Ongoing Investigations
Despite the extensive legal actions already taken, ASIC has stressed that its investigation into the Shield Master Fund is far from over. The regulator continues to investigate the role of various financial entities and individuals associated with the scheme, with the possibility of further enforcement actions in the future.
As ASIC’s investigation progresses, it remains a cautionary tale for investors, particularly those considering superannuation transfers for property investments. The regulator has urged Australians to carefully consider the risks involved and to seek independent, trustworthy advice before committing to high-risk financial ventures.
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