The First Guardian Master Fund used to be an investor holy grail for higher superannuation returns. It went into liquidation on July 14, leaving thousands of people thousands of dollars out of pocket. Most importantly, further damage has been dealt by this unexpected implosion to an estimated 6,000 Australians. This mass defection has raised alarm bells over abuse and transparency under the Connecticut investment scheme.
A 37-year-old man who lost his life savings after being duped by a radio advertisement earlier this year, luring him with the prospect of huge super returns. Susy, a 52-year-old single woman, was advised her current super fund was “very bad” after answering a TV ad in early 2022. Their experiences reveal a more pervasive trust deficit crisis among Australian investors.
In early 2023, Chris moved a staggering 97% of his superannuation into a retail fund after consulting with a financial adviser. He remembers the adviser selling it well, telling him, “It was awesome, [like] I could believe in him.” Chris knew he had made the right choice. The prospect of a cozy retirement in a decade or so and the prospect of a bigger nest egg spurred him on.
Then reality hit hard when Chris’s super balance dropped from $140,000 to $3,300. He expressed his distress, stating, “I’m losing sleep over it and figuring out, ‘Well, what do I have to do now?’”
Susy’s case is equally alarming. Her super balance has fallen sharply from $574,000 to around $6,000 due to the fund’s ruination. In her frustration, she lamented, “What am I to do now? Nothing. You just sit and wait. Sit and wait for what?”
The fall of the First Guardian Master Fund can be traced to the actions of its former director, David Anderson. Legal allegations against him show that he squandered his donors’ money. He directed close to $70 million into firms of which he was very much a director and shareholder. In addition, he reportedly transferred $247 million to overseas corporations after the beginning of an investigation into the fund’s practices. It’s alleged he used investors’ money instead to pay off a mortgage on a luxury house in Melbourne. Further, First Guardian was listed as the registered owner of a 2023 Lamborghini which he bought for $580,000!
The company’s liquidators have indicated that many members’ account balances may appear “close to zero” until further details about recoverable investments come to light. This latest news pours salt on the wounds of those such as Chris and Susy, who believed with all faith in the system.
Yet that hasn’t stopped leading financial expert Xavier O’Halloran from joining the growing chorus of concern. He explained that too often, investors blind trust their financial advisers. “Rightly, they’re putting their trust in people who they see as experts,” he said. Unfortunately in these cases it’s turned out that they’re not.
Chris reflected on the credibility of the advisers he consulted. “They all seemed legit on paper. Their websites checked out, they had the right licences in place to be giving financial advice. So, I thought, ‘everything’s sweet’.” His optimism has sadly morphed into skepticism as he and his team lead the way through this unforeseen pandemic storm.
Mary Delahunty, one of the other financial luminaries, warned people off investments that sound too good to be true. “Be wary of investments that sound too good to be true. It’s usually because they are,” she advised.
The Federal Court has permanently banned Anderson and fellow director’s conduct. They can’t exit Australia or move any funds out of the nation sooner than February 27, 2026. Liquidators are scrambling to get whatever is left of the lost dollars back to SBF’s defrauded investors. This litigation comes about because these investors have experienced serious turmoil in their lives.
Chris expressed concern for those less fortunate than himself: “I’m fortunate to be my age,” he said. “I’ve heard some horror stories about some people who’ve just retired losing it all.” His sorrowful sentiment speaks to the deep-seated fear that many Australians are staring down as they plunge into a darker future with the fund’s demise.
Susy is left to feel like a victim of forces that she cannot control. “I pay my taxes, I pay all my bills, I pay everything. For me to be a victim in this is just not fair,” she stated.
Susy and Chris are putting their money problems behind them. Yet, at the same time, they are extremely nervous about the future of these investments. Chris concluded with a sense of resignation: “I’m kind of left in the dark and just got to wait it out and see what happens next.”
