business

First Guardian investors dealt another 'utterly devastating' blow

First Guardian investors dealt another 'utterly devastating' blow

First Guardian investor Melinda Kee is one of thousands of investors who have received the devastating news that they may not be able to recover the millions of dollars they invested in the scheme that later collapsed.

First Guardian investors are devastated to learn they may not recover millions of dollars.

Out of nearly half a billion lost in the collapse, liquidators have recovered about $8 million.

The corporate regulator ASIC is taking legal action.

Thousands of First Guardian investors have received the devastating news that they may not be able to recover the millions of dollars they invested in the scheme that later collapsed.

Out of nearly half a billion lost in the collapse, liquidators have been able to recover about $8 million, but some $7 million has already gone in liquidation fees.

The corporate regulator ASIC is taking legal action against several players involved in marketing and running the schemes.

The liquidators of Falcon Capital, Ross Blakeley and Paul Harlon of FTI Consulting, said they still couldn't tell 6,000 First Guardian investors how much, if anything, they'll get back from asset sales.

That's because much of the funds appear to have been channelled offshore.

They expect to give a firmer picture after a series of court hearings involving some of the major players in November and December this year.

The directors valued the fund's investments at about $512.8 million.

So far the liquidators said they had recovered $8.02 million, or just 1.56 per cent.

First Guardian investor Melinda Kee, who also runs the group Save our Super, said she "felt broken" after hearing the news.

In November 2023, Ms Kee was given financial advice to switch her super from a retail fund into First Guardian and she lost $400,000 of her retirement savings.

She is one of 11,800 investors who collectively lost more than $1 billion in retirement savings after moving their super into First Guardian and the Shield-managed investment schemes, both of which later collapsed.

"It is utterly devastating that after 18 months, just $8 million has been recovered from more than $512 million in investments, while almost $7 million has already been absorbed by liquidation costs," Ms Kee told ABC News.

"People living with unimaginable stress and uncertainty, watching their futures slip away while they continue to wait for answers, justice and accountability."

In December, under a deal with the corporate regulator, Netwealth reimbursed about $100 million to about 1,000 First Guardian investors who invested through its platform.

The settlement raised suggestions two other financial services groups, Diversa and Equity Trustees, through which clients invested in First Guardian, would also do a similar deal with the regulator.

But the Australian Securities and Investments Commission (ASIC) is pursuing both Diversa and Equity Trustees in court, and they have said they will defend the lawsuits.

Some First Guardian investors are considering a class action to try recover their money.

Others can apply through what's known as the Compensation Scheme of Last Resort, but that's capped at $150,000 and some investors lost far more than that.

In their report, liquidators FTI Consulting, sort the investments into three main groups.

These include "written off" or "settled" investments worth about $117.6 million.

Of these, only $3.49 million, about 3 per cent, has come back, and the liquidators don't expect much more, since several of the companies involved are themselves in liquidation.

The second category includes "further recoveries expected" based on investments totalling $50.75 million.

So far $4.53 million (or 8.9 per cent) has come back, but the liquidators said they don't expect to recover the full value.

The third category the liquidators list falls under "uncertain" recoveries worth about $344.5 million.

In this case, nothing has been recovered so far and may never be, as they are mostly investments that the fund's operators channelled into overseas property and "speculative technology start-ups".

FTI Consulting also reports the value of the fees it is taking in the process—payments were about $6.96 million. The biggest items were their legal fees ($3.33 million) and liquidators' remuneration ($3.23 million).

On Thursday, ASIC told Senate Estimates that the corporate regulator is considering all options to disrupt the sale of InterPrac Financial Planning to Bellbird Australia.

Of the more than 11,000 investors who pumped more than $1 billion of their retirement savings into the First Guardian and Shield schemes, more than 6,000 were clients of advisers under InterPrac, which is owned by publicly listed company Sequoia.

These 6,000 clients put $680 million into the two funds on the advice of their financial planners who were licensed under InterPrac, and worry that the sale could shrink the pool of money available to compensate them.

ASIC chair Sarah Court told Senate Estimates that the regulator was "considering all options" on whether it could stop InterPrac's attempted sale of its business to Bellbird Australia.

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