The Australian Securities and Investments Commission (ASIC) asked the Federal Court today (Monday) to stop Royce Capital Investments and three other parties from selling financial products in Australia. The filing came four days after the regulator sued the auditors who signed off on the collapsed First Guardian Master Fund.

Together the two cases extend an enforcement effort covering about 11,000 investors and roughly A$1.1 billion ($725 million) across First Guardian and the Shield Master Fund. ASIC has now brought action against almost every layer of the chain that moved superannuation into the two funds.

Monday’s Filing Names a Shield Defendant

The application targets Royce Capital Investments Pty Ltd, Royce (Aust) Real Estate Pty Ltd, Louie Kortesis and Paul Chiodo. ASIC alleges the companies provided financial services without an Australian financial services licence.

Promotional brochures carried claims of a “guaranteed or fixed return of 13% per annum,” according to the regulator. Five self-managed superannuation funds invested A$1.536 million in August 2025.

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ASIC wants the defendants restrained from promoting or accepting money for three offshore vehicles: Royce Global Investments LP and Royce Global Real Estate LP in the Cayman Islands, and Royce Private Investments Fund LP in Delaware. It is also seeking a general restraint covering any financial product in Australia.

Chiodo is a former director of Keystone Asset Management, which operated Shield, and is a defendant in separate proceedings ASIC filed in June. None of the allegations in either case have been tested in court.

Auditors Signed Clean Reports on Untested Assets

On 31 July, ASIC sued Auditeo Australia Pty Ltd, lead auditor Ajm Didarul Islam Khan and Brian Robert Taylor over audit reports on First Guardian and its compliance plan covering the 2020 to 2024 financial years.

Auditeo’s files do not show that any financial audit was performed for 2021, though an unqualified report was issued, ASIC alleges. About A$137 million of reported assets went untested in 2022, rising to roughly A$170 million the following year.

Liquidators were appointed around six months after those reports were signed. More than 6,000 Australians were exposed, and liquidators have warned losses could reach A$446 million.

The Two Funds Are Linked by the Advice Chain

First Guardian and Shield had different operators. Falcon Capital ran the first, Keystone the second. ASIC states on both enforcement pages that the investigations involve some of the same people and companies.

The overlap sits in distribution. Adviser Ferras Merhi and advisers working for him directed about A$296 million of client superannuation into First Guardian and around A$230 million into Shield, ASIC alleges. The Federal Court restrained him from financial services work in October 2025.

In many cases lead generators contacted people and referred them to advisers, who told them to roll existing balances into a platform fund or set up a self-managed fund, according to the regulator. First Guardian suspended withdrawals in May 2024.

Trustees Have Paid the Largest Sums So Far

Netwealth admitted contraventions in December 2025 and agreed to compensate affected members A$100 million. ASIC sued Equity Trustees twice, in August 2025 over Shield and in May 2026 over First Guardian, and sued Diversa Trustees in December 2025.

Three advisers have been banned. Aristotle Papapavlou was barred permanently in April 2026, Rhys Reilly for 10 years and Shane Monte Silva for five. ASIC sued advice licensee Interprac Financial Planning in November 2025 and cancelled the licence of Financial Services Group Australia in June that year.

A Pattern in ASIC’s Recent Filings

The regulator has been moving at pace on unlicensed and misleading conduct. It applied last month to wind up Capital Guard over A$17.4 million raised on bonds it says may not exist.

Its most recent enforcement year returned A$583 million to consumers, the highest figure it has recorded.

ASIC describes the First Guardian and Shield investigations as among the most complex in its history, with more than 45 court appearances completed and more expected. No hearing dates have been set in either of the new proceedings.

The A$1.536 million at issue in Monday’s filing is the smallest sum in any of the cases brought so far. ASIC’s application seeks to stop the three offshore vehicles being promoted before more money is taken.

This article was written by Damian Chmiel at www.financemagnates.com.RegulationRead More

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