In Sequoia Financial Group’s full-year financial results webinar, chief executive Garry Crole has argued that “there was no reason for us to doubt that Shield and First Guardian were what they claimed to be”.
Sequoia has been under fire over its role in the failures of the Shield Master Fund and the First Guardian Master Fund, both of which saw heavy flows coming from advice firms linked to Ferras Merhi – either through his firm Venture Egg or others that his own AFSL had authorised.
InterPrac, which is a wholly owned subsidiary of Sequoia, had authorised both Merhi and Venture Egg until cutting ties at the end of May.
Venture Egg has been the main advice firm under the regulator’s spotlight, with somewhere in the range of $440 million in client funds invested across Shield and First Guardian.
However, InterPrac also authorised both Reilly Financial and Miller Wealth Group, which had advised clients to invest in one or both of the funds.
Earlier in August, InterPrac of terminated its relationship with the practices, as well as Rhys Reilly’s other firm – The Life Insurance Company.
On Thursday, Crole said Sequoia had taken “decisive action on some breaches of three practices that we had within the network”.
“I worked very closely with the regulator and the clients of those particular practices, and I think that in 12 months’ time, a lot of the noise around that will have played out,” he said.
“We’re looking to be very actively supporting the clients of those three practices, and we’ll be announcing some strategies in respect to that in coming weeks. We’ve been working on some strategies to support clients, and we’ve employed a number of additional self-employed advisers within our salaried advice business to support those clients.”
Calling the licensee’s involvement in the Shield and First Guardian scandals the “elephant in the room”, Crole sought to reassure investors that the business was in good shape despite its potential exposure.
“We empathise with the clients who have investments on platforms within Shield and First Guardian. Clearly, it’s not something that we saw coming. We believed that both Shield and First Guardian were reputable managers with reputable responsible entities with research that was a standard that we believed was high, with platforms who approved their products,” he said.
“What ended up occurring and becoming evident in First Guardian’s case in in 2025 and in Shield’s case in late 2024 when ASIC took the action they did was completely different than anyone’s understanding.
“We took action very early. We took proactive action in respect to Shield in July 2023, so well before there was any noise about any impropriety on Shield of any kind. And in First Guardian’s case we took action in December 2023, so we stopped all new business completely from those platforms.”
The CEO argued that this was “not because we knew there was an issue”, rather simply down to the large volume of client allocation to the funds coming from a small group of its advisers.
“We were very, very early, and that was well before ASIC or the regulators, or any parties felt that there was an issue with Shield or First Guardian. We certainly didn’t,” Crole added.
He also put much of the blame on other parties involved in the compliance chain, including the research house, auditors, super fund platforms.
“If you read the SQM Research and you look at the quality of auditor, in particular Shield having BDO, the high-quality platforms that approved those products, there was no reason for us to doubt that Shield and First Guardian were what they claimed to be,” he said.
Additionally, Crole put forward the case that InterPrac advisers involved were recommending their clients into these funds through APRA-regulated platforms, adding that they offered more “protection”.
“They didn’t invest directly, as some of the other cases did. You saw a lot of other licensees set up self-managed super funds and invest directly into Shield or First Guardian, and that offered those members very little protection,” he said.
“In our case, all of the funds under management is in APRA-regulated superannuation funds, and it is our belief that there’s protection under APRA-regulated superannuation funds that we are looking to discuss with those members, and we have a client information pack, and we’re writing to every single member at present, and we’re talking to regulators and all of the parties at present in respect to how we can support those clients, and we’re being proactive on that.”
The licensee has also learnt from the collapses, Crole added, particularly noting the need for the responsible entity and the manager to be separate parties.
“I think there’s a learning in respect to independent trustees and independent REs, particularly for smaller new funds. We have had a learning from that,” he said.
“We’ve had a learning that the APRA-regulated superannuation system, which we truly believe in, does provide member protection far more than non-APRA regulated superannuation investments in this particular space, and we’re learning from that.”
Earlier this month, Sequoia revealed there has so far been a total of $22 million in complaints against InterPrac Financial Planning over advice that its authorised representatives had provided.
“This represents InterPrac’s potential exposure prior to any assessment of the merits of each complaint, and before consideration of any recoveries or offsets,” Sequoia said at the time.
It also announced that it established a governance committee, with former ASIC commissioner Danielle Press coming on board as independent chair.
It is simple. Every adviser needs to research and understand the products that they are advising their clients to invest in. Clearly no real research was done on these products. The advisers didn’t care. They were being paid millions to channel clients money in.
Every adviser needs to know their client. In most of these cases, the adviser either didn’t meet, or barely met the client. This whole charade is fraud and theft on a grand scale.
The Licensee’s job is to supervise their advisers so that this crap doesn’t happen. Sequoia can’t dodge their responsibilities. The Garry Crole’s of this industry need to be drummed out of it.
As for Danielle Press, what is wrong with her.
The main issue here was the advice licensee and their way of doing business, that is negative pledge as an advice model is clearly not compliant under the laws. On the subject of research, if you assume that a rating agency such as SQM had provided their opinion, and the platforms had also approved these products, what makes you believe that YOU would have been able to see through the lies and deceit of the fund manager??
Interprac the company that recommended me to join the Class Action against Macquarie, whilst they had absolutely no idea where my super was invested through them! They got it all wrong. It’s laughable that Crole makes the comment he is working with impacted members. How in denial can a CEO be?
Crole states that “the business was in good shape despite the exposure”.
But what about the client’s finances who were encouraged to invest in these failed entities by the very people Crole’s business authorised to provide that advice??
What sort of shape are they in Gary?……(not good I will assume)!
Interprac must have no idea what Corporate Governance means. How on earth do they think appointing the former Commissioner of ASIC isn’t an actual conflict of interests. It’s unethical. This organisation needs a massive crackdown on its operations and Board.
lol… when there is actual reports being ignored by the Senate that ASIC is a failure. ASIC failed first.
those evil super funds with their desk jockey back packers aren’t looking so evil now…
60 mins special this Sunday about the Big Superannuation scam.
Their will be a few tunes into this .
Why has Sequoia purchased nearly 20% of Centrepoint Alliance? I’m not sure what they are trying to achieve?
Crolle is the Basil Fawlty of our industry. Interprac approached me a few years ago and described their compliance as a “light touch”. They were recruiting former mortgage brokers. Imagine being entirely ignorant of your own incompetence to the extent you can’t see it. It’s only a year since the Libertas debacle, where he closed the license and got everyone else to pay for the dodgy advice
Danielle Press was the ASIC former Commissioner between 2018 and 2023. How on earth can she be appointed to a company that’s going to be under investigation for the largest Superfund scandal in Australia’s history under her watch as Commissioner of the regulator? The former Commissioner of the regulator (ASIC) joining the company (Interprac) that was supposed to have oversight for the investments of approximately 11,000 members funds, losing $1.2billion. This is not just a perceived conflict of interest but an actual conflict of interest. It’s the most unethical appointment that could have happened. It’s so bad, it is actually criminal. She’ll be defending and advising the company that failed their responsibility when she was the Commissioner of the regulator that was to protecting members Superfunds. The government should force her to step down immediately! The current ASIC commissioner should have informed government this cannot be allowed. Are they so delusional. Unethical behaviour at an epic scale. The Royal Commission needs to step in! This has become an utterly ridiculous joke!
Just more of the same (E.G Dixon) “nothing to see here”.
Crole, Interprac’s own current advisors when meeting with clients to reinvest remaining funds, indicate they do not understand how Interprac ever allowed ShieldMaster and First Guardian to be invested in. These funds did not meet the minimum 4 star rating and had a very short and limited lifespan. This does not meet the requirements for large scale investments. Stop lying to the media, public and ASIC to try and make Interprac looks innocent. Interprac failed their responsibility as the governing body, you know that, ASIC knows that and every single member that lost their super funds knew this.
Even ASIC are saying that SQM Research, Macquarie and Equity Trustees failed though. Otherwise why the recent civil action against Equity Trustees?
not to mention money found its way to Euree asset management when they had no track record of any length and the same research ratings as Shield/First Guardian. oh and SEQ owned 20% of them not to mention Ausprac super platform owned by SEQ – look at this portfolio allocation = https://www.auspracsuper.com.au/copy-of-terms-and-conditions
look at the portfolio holdings statement – there is an over 50% allocation to Shield/First Guardian all sitting on a platform owned by SEQ
The appointment of the former ASIC Commissioner to Interprac that’s under investigation by ASIC is a perceived and actual conflict of interest! This is not in the interests of members that lost their super funds. How on earth did the government and ASIC not block this appointment. She should be forced to step down from that role immediately. Australia government is the laughing stock of the world to not question this appointment. Are all these government officials fit for office to not question this.
Crole got no idea what’s going on at Interprac! Funds were still invested in 2024. As governing body Interprac has failed its duties and Crole plus all Board Members should face the full consequences of the law. Jail time should be the bare minimum. Interprac should be forced to pay all losses plus interest and opportunity losses. Civil claims should follow bankrupting this total unethical organisation. Interprac had no idea what their licensees were up too. They still don’t even know where my super is invested in.
When a business under your AFSL grows 10 fold each year for several years and no audit is done and no questions are asked of how this is possible, is that evidence of poor supervision by the licensee? But when you have several doing this…… come one!
Crole is walking a very thin line here with the “no reason to doubt” defense. This completely misses the fundamental point – it doesn’t matter what Shield and First Guardian claimed to be, or who else approved them. The only thing that matters is whether the SOAs withstand scrutiny. Everything else is just noise.
If the advice documents are solid and the recommendations were appropriate for each client’s circumstances, then InterPrac will likely win most of their AFCA complaints. But if those SOAs don’t hold up under examination – if the advice wasn’t suitable, if the risk wasn’t properly explained, if diversification was inadequate – then they’re looking at significant payouts across hundreds or even thousands of clients.
The critical questions Crole isn’t addressing are: What does InterPrac’s internal review actually say about the quality of the advice provided? How many of these complaints are likely to escalate to AFCA? What are the total potential losses they’re facing? And crucially – will those losses exceed their PI insurance limits?
It’s telling that the annual report just took a $4.2 million goodwill impairment for the Licensee and Adviser Services CGU, citing “financial risk due to regulatory compliance and uncertainty related to the provision of financial advice to customers.” That’s corporate speak for “we have serious problems.” Yet the report and investor presentation remain conspicuously silent on the actual quantum of potential AFCA payouts.
These are the answers any Sequoia shareholder should be demanding. Pointing fingers at research houses, auditors, and platforms won’t make the liability disappear if the underlying advice was flawed.
Interprac should lose their licence. Period. They knew exactly what was happening. It’s all listed in the SOA. Embarrassing and an affront that they are trying to defend their position. Hold them accountable to that no one else follows them in future.
Utter crap, people were still investing in this in early 2024.
The proof is there
These people will never admit fault
Not through interprac. Blaming the wrong people
Hey Anon, the clients were getting thier super put into these funds right up until they went belly up. So yes they were still investing into Shield and First Guardian, through thier “”advisers”” licenced by interprac.
Why would you defend this? Are you thier BDM or something?
At the same time Crole is trying to talk down the issue, he is actively trying to flog the Dealergroup to another listed Dealergroup. Says a lot about the person, and his bizarre perception of himself compared to everyone elses.
Interprac is an unethical company! The appointment of the former ASIC head should have been blocked as it sends a message of “ignoring conflicts or perceived conflicts of interests.” This is so unethical and not in the interests of these members that lost $1.2 billion. Worse is government is so removed of reality, they didn’t even question this appointment.
A lot of important facts missing there…
– Who promoted the funds to the platforms in the first place?
– What was the approved product list review process?
– What was the ongoing supervision process that enabled these firms to place move client money without advice (so-called negative consent)?
InterPrac authorises advisory firms and has certain responsibilities to investors under the Corps Act. As part of its initial due diligence and ongoing surveillance, it relies in part on information gained through those who are close to the coal face i.e. platforms, auditors, research houses and ASIC. Each of whom either authorised or enabled the setting up or running of Shield and First Guardian. A massive collective fail. InterPrac obviously should have done better, but they are not the worst offender in this group.
While your commentary might be unpopular it is correct. It all started with Asic firstly approving these funds and went from there.
Correct, the actual managers who stole the money 1, then platforms and rating agencies endorsed these thieves and could’ve happened to any dealer group. Interprac are unlucky and desisted the practises
Interprac as governing is the worse offender and the buck stops with them! They won’t survive this, if they do, ASIC will be shut down as regulator for allowing this to occur.
The auditors (BDO) of these funds aren’t going to survive this either. Funds were not even invested in the asset classes that Macquarie Wrap disclosed to members. This raise massive concerns over Superfunds for all citizens. Was ASIC so fast asleep that they didn’t see this coming?!
He can’t be serious; totally dillusional.
Desperate more like it
Interprac is so unethical the appointment of the former ASIC Commissioner indicates how desperate they are to deceive and wing this corrupt and epic failure on their side. Government and ASIC are so removed from reality they don’t see the actual and perceived conflict of interest at all. She has to resign immediately from her appointment as this isn’t in the interests of members! It’s to protect Interprac!