ASIC this week sued the two men who ran First Guardian, the investment fund that took more than $600m from over 6,000 Australians and left most of them waiting to find out how much they’ll get back. Mortgage brokers never sold the fund, and none of the money went through the broking channel. The industry is still helping to pay for it.
The regulator has filed civil penalty proceedings in the Federal Court against David Anderson and Simon Selimaj. Anderson was managing director of Falcon Capital, the company that ran the fund, and Selimaj was its executive chairman. ASIC alleges that about $270m of investors’ money went into funds Falcon controlled. From there, the regulator says, it was paid out to restaurants, a brewery, offshore entities and property developers with little paperwork or security. It alleges that at least $57m ended up with entities controlled by the two men, and that at least $27.9m went into property developments on an unsecured basis. None of the allegations has been tested in court.
The route the money took into the fund matters for brokers. ASIC says lead generators cold-called people and passed them to financial advisers. Those advisers told clients to move their super into retail platforms or set up SMSFs, and then invest in First Guardian. The fund was a managed investment scheme, not a mortgage product, and brokers had no role in selling it.
