Thousands of Australian investors stand to lose up to $274 million of their retirement savings as financial regulators move to shut down what they describe as a deeply troubled investment operation.

The Australian Securities and Investments Commission (ASIC) has applied to the Federal Court to liquidate Falcon Capital Limited and wind up its flagship First Guardian Master Fund, escalating the months-long investigation into the fund's activities.

Australian Investors Face $274 Million Loss

The First Guardian Master Fund, which marketed itself as achieving "sustainable growth in the Asia Pacific region" through "responsible capital growth" and "sound risk management," now faces allegations of misrepresentation, conflicts of interest, and improper use of investor funds.

Falcon Capital, as the fund's responsible entity, was tasked with overseeing the fund's operations and ensuring regulatory compliance for investment strategies that included "absolute return investment strategies, multi-asset portfolios, and strategic asset allocation."

ASIC is also seeking the appointment of a receiver to manage the personal property of Falcon director David Anderson, according to court documents filed today. This action builds upon February's asset freeze affecting Falcon, First Guardian, and Anderson personally.

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ASIC Seeks Liquidation of Falcon Capital

The regulator's investigation has uncovered approximately $274 million in overdue cash receivables within First Guardian's portfolio, alongside more than $23 million allegedly paid to marketing entities contrary to investor disclosures. ASIC also alleges potential conflicts of interest involving Anderson's personal financial interests in entities receiving fund investments.

"Investors may have been misled about the security of their investment and likely returns," ASIC stated in its filing. The case is scheduled for hearing on April 9.

The First Guardian fund has largely suspended withdrawals since May 2024, leaving investors uncertain about the fate of their capital. Many investors reportedly entered the fund after being contacted by lead generators who referred them to financial advisers recommending they roll superannuation assets into retail choice funds or self-managed superannuation funds (SMSFs) to facilitate First Guardian investments.

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Ferras Merhi and Osama Saad

In earlier communications, Falcon had indicated plans to transition the fund towards listed instruments only, moving away from private equity projects. However, by March 11, Falcon Capital informed investors it was developing a plan for an "orderly wind down" of First Guardian, acknowledging the regulatory action against it.

The case represents another chapter in ASIC's broader investigation that has already resulted in asset freezes against financial adviser Ferras Merhi and former director Osama Saad in February, both allegedly connected to First Guardian's operations.

Source: Finance Magnates