ASIC Takes Action! Ferras Merhi Banned by Federal Court for Breaches in Investment Management

The Australian Securities and Investments Commission (ASIC) has obtained Federal Court interim orders restraining Ferras Merhi from conducting any financial services activities, following allegations that he provided conflicted and defective advice while managing millions in client funds. The enforcement action underscores the regulator’s commitment to maintaining integrity and compliance within Australia’s investment and brokerage sector.

According to ASIC, Merhi’s activities between 2020 and 2024 involved steering substantial investor funds—approximately $526 million—into investment vehicles including the Shield Master Fund and First Guardian Master Fund. During this period, Merhi and his advisers allegedly received nearly $37 million in fees and promotional payments, raising concerns over conflicts of interest and potential breaches of fiduciary duty. ASIC contends that these actions constituted unconscionable conduct, with investors’ interests potentially subordinated to personal gain.

The interim court orders immediately prohibit Merhi, or anyone acting on his behalf, from offering financial product advice, engaging in financial product transactions, or marketing investment schemes. Additionally, a receiver has been appointed to review Merhi’s assets and provide a report to the Court, while provisional liquidators have been assigned to his associated financial advisory entities to assess solvency and suspected misconduct.

Market observers note that the case serves as a stark reminder for brokerage firms and investment intermediaries to maintain robust compliance frameworks and ensure transparent client engagement. The collapse of First Guardian and Shield has left investors exposed to considerable financial risk, emphasizing the necessity for brokers to verify counterparties and investment managers rigorously.

ASIC’s ongoing investigations into Merhi’s operations highlight the regulator’s proactive approach in safeguarding market participants and mitigating systemic risks. The enforcement measures also reinforce broader expectations for financial services providers: adherence to the Corporations Act, diligent management of conflicts of interest, and precise reporting and disclosure practices.

For trading firms, advisory businesses, and investors alike, the Merhi case is a critical signal. Regulatory scrutiny continues to intensify around firms offering complex investment products, and those failing to implement comprehensive compliance protocols risk intervention, penalties, and reputational damage.

BrokersView reminds you

The Australian Securities and Investments Commission (ASIC) is the national regulatory body overseeing local companies, markets, and financial services. Brokers operating in the country or providing financial services must hold an Australian Financial Services (AFS) license issued by ASIC.