Can you protect yourself from financial misconduct?

There’s over $1.2bn at stake in the latest funds blow-up, and more than 12,000 investors are affected. The details are extraordinary and horrifying because these blow-ups are a contradiction of the trust we put in the financial industry.

In the cases of two of the blow-ups, it has been alleged that investor money was spent on luxury cars – liquidators of First Guardian Master Fund highlighted a Lamborghini, and there is a suggestion that a similar purchase by Australian Fiduciaries (and transported to Malaysia) was also made from investor funds.

It is not the first time Australians have been hit by fund blow-ups – and it is unlikely to be the last. Whether we want to acknowledge it or not, money is critical to our well-being and protecting our assets is essential.

In this wire, I’ll take a look at how investors were targeted by First Guardian Master Fund, Shield Master Fund and Australian Fiduciaries, along with a few major Australian collapses of the past. I’ll also cover some advice from ASIC on how to avoid investing in these types of funds in the future.

A tale of three (mis-managed) funds

In case you missed it, there are three fund blow-ups at play currently. These include Shield Master Fund, First Guardian Master Fund and Australian Fiduciaries Limited. The best place to find the finer details is on ASIC’s website, so I’ll focus on some particular ‘low-lights’ here.

There are some commonalities between these cases. 

Many investors were directed to them by using super comparison sites, which advertise heavily on social media platforms, and were encouraged to move into self-managed super funds where they could opt to invest in them. Compare the Super, which has since been shut down, was particularly involved in referrals to both Shield and Australian Fiduciaries.

These investors didn’t realise that these sites were lead generation tools for financial advice and affiliated with the funds it was directing to. There are kickbacks involved with these sorts of tools, which muddy the grounds of actually looking out for the best interests of clients. Some investors didn’t even realise they were invested in these funds at all until it was too late, they simply followed the advice to move their money and everything was done on their behalf.

Other investors were also hit with cold-calling and similar marketing tactics to encourage them to change funds. There was targeted social media advertising playing on fears of those close to retirement about whether they had enough funds.

All of the funds were registered managed investment schemes with the underlying entity offering them holding Australian Financial Services licenses.

The next similarity is that money was mismanaged by these funds.

Money was invested in illiquid assets or not even used for investments at all. Management of these funds used complicated paths for transfers and purchases, making it difficult for the current liquidators to accurately trace where money has gone. Each raised alarm bells for ASIC in 2024, with Australian Fiduciaries the most recent to receive court orders freezing assets and appointing a liquidator (September 2025).

Finally, these funds were available on legitimate, reputable platforms and superannuation providers – Equity Trustees, Macquarie, Netwealth, Diversa, along with Q Super, Freedom of Choice Super, AMG Super, Acclaim Wealth, Super Simplifier, Your Choice Super, AusPrac Super, and Praemium Super. Investigations have suggested that Shield, First Guardian and Australian Fiduciaries were not transparent about their asset balances or activity when reporting back into these platforms.

The result has been devastating.

A total of $1.2 billion is at stake for more than 12,000 investors, and it is likely that little of it will be recovered (although there are some suggestions that investors in Shield may have better odds of recovery than the others).

The combination of these three is the biggest fund blow-up loss in Australia. The previous and dubious honour of this title belonged to the Storm Financial crash, which took out $1bn in investor money.

Comparing to the past

It is often tempting to compare current situations to the past.

Storm Financial might spring to mind but it is not the same story, though there were significant losses in that case and questionable financial advice given to clients.

Storm’s business model encouraged aggressive leveraging, which gave commissions to its advisers. Unfortunately, this meant that when the Global Financial Crisis hit, suddenly all of these clients received margin calls and were forced to sell into the crisis at a loss and continued to accrue interest on the original margin loan. Many ended up with debts far beyond their assets and ability to repay.

More recently, the Dixon Advisory and Superannuation Services collapse in 2019 saw losses of $450m of client money. The full details of this are still somewhat opaque, given settlements of the class action taken by Shine Lawyers. The initial court case noted that the investment committee of Dixon Advisory overruled the obligations of the financial advisers to act in the best interests of their clients. Clients were simply put into products without consideration of their personal needs or situations. The products were often high-fee and high-risk.

Lessons for investors

Wouldn’t it be lovely if we could say such collapses will never happen again?

Unfortunately, there’s only so far regulations can go when alleged criminal behaviour and the desire to deceive exist.

In the latest blow-up, activity was not transparent, and there were efforts made to cover up the true value of assets and where money was being spent. The funds were high-risk and mislabelled.

Typically, investors are told the following steps to avoid scams:

• Check the financial license and look up your financial adviser on the register.
• Look at the track record of any investment you are investing in, including the history of the underlying management team.
• Read the product disclosure documents to understand what you are investing in and the risks involved (like gearing). Transparency of investments and style is important.

It wasn’t enough in these instances. These were licensed products. The financial advisers involved were also registered with no red flags to raise concerns on the register.

ASIC have made additional recommendations to help investors in the future.

• Be wary of comparison sites and understand the underlying motivations for these.
• Check the legitimacy of online advertisements before using the tools offered by them.
• Watch for cold-calling and similar tactics to push you into investments.
• Challenge recommendations, ask “why is this the right investment for me instead of what I’m already using?”
• Continue to be diversified across products and styles so your finances aren’t dependent on the activity of one investment that could see you lose everything.
• Watch for big claims about performance for investments. If it sounds too good to be true, it probably is.

What to do if you are concerned about an investment or the financial advice you've received?

Seeing some red flags in your finances? There are some things to consider.

• You can search ASIC's registers to check licensing or if an investment or adviser is under any form of investigation.
• Report an investment scam through Moneysmart.gov.au. You can also find information on a range of financial services, including financial counselling on this government-managed site.
• Head to the Australian Financial Complaints Authority (AFCA) to make a complaint.
• Consider seeking a second opinion on your finances through an alternative expert.

Stay safe investing and keep your eyes and ears open.