ASIC has sued the two men who ran First Guardian, and the case should have wide interest to anyone involved in D & O cover.
The regulator has filed civil penalty proceedings in the Federal Court against David Anderson and Simon Selimaj. Anderson was managing director and chief executive of Falcon Capital, the fund’s responsible entity. Selimaj was its executive chairman and chief investment officer. ASIC also wants the court’s permission to sue Falcon itself, which it needs because the company is in liquidation.
The case comes as the cost of the collapse spreads across financial services. The Compensation Scheme of Last Resort lifted its estimate for the 2027 financial year to $198.1m in July, after adding a $30.2m allowance for Shield and First Guardian claims. Treasury’s draft plan for the resulting special levy would charge managed investment scheme responsible entities $40m, and Falcon was one of those. It would also lift mortgage and finance brokers’ share from about $668,000 to $7.79m.
Insurers face a separate question. The public record doesn’t show whether Falcon or its directors carried D&O or PI cover, or whether any insurer is paying for their defence.
Read next: ASIC closes in on Shield, First Guardian: What brokers and insurers need to watch
Between August 2019 and April 2025, more than 6,000 Australians put over $600m into First Guardian, mostly from their super. ASIC alleges that about $270m was moved into unregistered underlying funds Falcon controlled. From there, the regulator says, money was paid out with poor paperwork, little security and conflicts that were never managed. At least $57m allegedly ended up with entities controlled by Anderson or Selimaj.
ASIC names specific investments:
The regulator also alleges that Falcon’s product disclosure statements misled investors by describing the fund’s investment processes as robust. It says Anderson made investment decisions without meaningful oversight and did not disclose his conflicts, and that Selimaj failed to keep watch over what Falcon was doing.
“These were Australians’ retirement savings,” said ASIC chair Sarah Court. She said ASIC alleges money was handed over before contracts were signed, including for ventures linked to the people running the fund. She also linked the case to ASIC’s concerns about private credit, where it has flagged weak governance and unmanaged conflicts.
ASIC is seeking declarations, penalties and disqualification orders against the pair. It will not try to collect any penalty imposed on Falcon, so that whatever money remains goes back to investors.
Anderson’s lawyer, Dan Mackay of Mackay Chapman, has reportedly said the claim runs to more than 150 pages, his client was served only that day, and ASIC still has to prove its case. No public response from Selimaj had been reported at the time of writing.
If insurance does exist, it may not do much. D&O policies generally pay defence costs, but most carry conduct exclusions that apply once dishonesty is proven. Civil penalties are generally treated as uninsurable.
The Insurance Council of Australia made a related point to Treasury earlier this year. It argued that PI policies don’t cover fraud, criminal conduct or systemic failure, and that pushing more of the CSLR’s load onto PI would not fix the scheme’s funding gap. It has also warned that changes to how the scheme is funded won’t slow its rising costs.
The CSLR says it has paid more than $200m to more than 1,600 people since it started in April 2024. Of its revised 2027 estimate, $190.3m relates to personal financial advice, almost ten times the $20m cap for any one subsector. The cost above the cap, roughly $170.3m, has to come from a special levy. The detail is in the scheme’s revised FY27 levy estimate. General insurance brokers sit outside the scheme for now, and NIBA has resisted any move to bring them in.
Brokers placing financial institutions business should expect tougher renewal conversations. Trustees, responsible entities and advice licensees are likely to face questions on platform onboarding, related-party exposures and private credit holdings. ASIC commissioner Alan Kirkland has already set out how the regulator’s response is reshaping the compliance landscape for insurers. Clients with any exposure to master funds should also check their remediation cover and their exposure under the design and distribution obligations.
Read next: First Guardian and Shield collapses: A wake-up call for financial institutions, brokers and insurers
The lawsuit came within a day of the liquidators’ latest report to creditors. The directors valued First Guardian’s investments at about $512.8m. FTI Consulting’s Ross Blakeley and Paul Harlond have recovered $8.02m of that, or 1.56%.
Investments with a book value of about $117.6m have been written off or settled, returning $3.49m. Another group worth $50.75m on paper has returned $4.53m, and the liquidators don’t expect to recover it in full. The largest group, about $344.5m and mostly offshore property and early-stage tech ventures, has returned nothing.
Legal fees of $3.33m and liquidators’ fees of $3.23m have taken a large share of what has come back. The liquidators say they will give a firmer forecast after public examinations in the coming weeks. Shield director Paul Chiodo is among those to be examined.
Anderson and Selimaj join the former directors of Keystone Asset Management, which ran the Shield Master Fund. ASIC sued them in June. Shield took in more than $530m from about 5,800 investors.
ASIC says it has now sued every super trustee that offered either fund. That includes Diversa Trustees, through whose funds around $300m reached First Guardian, and Equity Trustees, which is defending the claim. Macquarie has paid $321m to Shield investors, and Netwealth agreed to compensate First Guardian members in full at a cost of about $100m. By May, ASIC said more than $420m had been returned to investors.
Read next: ASIC finds PI reporting failures across financial advice licensees
ASIC’s First Guardian enforcement page lists every action so far. The regulator says its investigations are continuing.
