A $50,000 sale, 1,400 complaints and a going concern note: the Sequoia case is the profession's live test

Sequoia Financial Group told the market on 28 August that a material uncertainty exists over its ability to continue as a going concern. The ASX-listed owner of InterPrac Financial Planning flagged its intention to revive the sale of the licensee, as a precursor to trying once again to unwind the deed of cross guarantee that binds the group's entities together.

For a sector that has spent a year debating who should pay for the Shield and First Guardian collapses, this is the case that will answer the question in practice rather than in principle. It is the clearest available test of whether liability for large-scale advice failure actually lands on the licensee that authorised the advisers, or whether it flows through to the levy base.

How the file got here

InterPrac was the licensee for advisers who moved client money into the Shield Master Fund and the First Guardian Master Fund. In November 2025, ASIC commenced civil penalty proceedings against it, alleging that it failed to ensure former authorised representatives Venture Egg and Rhys Reilly Pty Ltd complied with best interests obligations, and that its risk management systems were inadequate. On ASIC's numbers, those representatives advised around 6,843 clients to invest approximately $677 million of superannuation into the two funds. The regulator is seeking declarations, civil penalties, and orders restraining InterPrac from carrying on a financial services business.

The commercial consequences arrived before the legal ones. Macquarie, Netwealth, Colonial First State, AMP, BT and HUB24 all restricted InterPrac authorised representatives on their platforms. Advisers left in a steady stream. Padua Wealth Data recorded 55 departures from Sequoia in the four months to February 2026, and the weekly register data has logged further exits almost continuously since, including six in a single week in August, most of them landing at Gill and Co, Springboard Wealth and Spark.

In February, Sequoia ended an internal cross guarantee between its licensee subsidiaries. The company declined to confirm whether the change was made to insulate the group from InterPrac's liabilities. In March, Sequoia Wealth Group signed a share sale agreement to sell 100 per cent of InterPrac to Conquest Investment Partners. The consideration was $50,000.

Why ASIC went to the Federal Court

The group has been party to an ASIC deed of cross guarantee since 25 May 2022, under which each entity guarantees the debts of the others in a winding up. That deed is the mechanism by which InterPrac's AFCA liabilities could reach the rest of Sequoia.

Under the deed, if the sale completes and Sequoia's directors certify that it is bona fide and the consideration reasonable, Sequoia and the other group entities are released from their guarantee obligations. ASIC's concern, set out when it sought the appointment of a receiver in April, was that the sale "may adversely affect the interests of its creditors", including InterPrac's liabilities arising from AFCA complaints about Shield and First Guardian. At that point ASIC counted approximately 911 open complaints against InterPrac. By June, AFCA lead ombudsman Shail Singh put the figure at 1,409, out of 3,429 complaints across the two collapses. AFCA has issued a lead decision covering InterPrac.

Key point: The deed of cross guarantee is the only mechanism connecting InterPrac's complaint liabilities to the rest of the Sequoia group. Everything that has happened in the Federal Court this year has been a fight over whether that connection survives a sale.

The receiver ASIC sought would have had a narrow brief: to report on whether the sale was genuine, whether the price was fair and reasonable within the meaning of the deed, and on InterPrac's financial position and solvency. Sequoia's position was that the regulator's concern was unfounded. The company told the market that InterPrac "will remain a party to the ASIC Deed of Cross Guarantee" immediately after any sale, and that a receivership over the guarantees would neither stop the licensee trading nor block the transaction.

The proceeding did not run. On 30 July the Court granted ASIC leave to discontinue, after InterPrac and Sequoia undertook to the regulator and to the Court that they would not deliver the certificate under clause 4.2(c) of the deed in respect of the Conquest sale. A court order to that effect followed on 31 July.

The undertaking preserved the guarantee. It did not resolve the underlying transaction, and Sequoia's latest disclosure confirms the company intends to try again.

The arithmetic the profession should look at

Set the consideration against the exposure. A licensee facing 1,409 AFCA complaints, a lead decision already issued, and civil penalty proceedings seeking to restrain it from carrying on a financial services business, changing hands for $50,000.

That is not, on its own, evidence of anything improper. A licensee carrying that liability profile may well be worth very little, and a purchaser prepared to take it on is doing something a lot of buyers would not. Chief executive Garry Crole, who resigned in July after his contract expired without renewal, had earlier put the argument directly, saying that a party with an ongoing business is better placed to support remediation than one for which the licensee is no longer a going concern. Alex Fabbri is now interim chief executive and David Hentschke interim chairman. Sequoia shares rose 13 per cent on the leadership announcement.

But the structural point stands regardless of motive. Where a licensee cannot meet AFCA determinations, those determinations become unpaid, and unpaid determinations are what the Compensation Scheme of Last Resort exists to satisfy. The scheme's revised FY27 estimate attributes $190.3 million to the personal financial advice subsector, $170.3 million above the legislated $20 million cap. Every determination that a licensee cannot fund is a determination the remaining profession funds.

That is why the disposition of one ASX-listed micro-cap matters well beyond its shareholders. Sequoia is where the question of whether corporate structure can be used to manage advice liability is being worked out in real time, in front of the regulator, with the answer priced into every adviser's levy notice.

What to watch

Three things.

Whether the revived sale proceeds, on what consideration, and whether Sequoia's directors are prepared to give the certification the July undertaking prevented them from giving. ASIC has shown it will litigate the point.

Whether the November civil penalty proceeding reaches the restraint order ASIC has asked for. An order restraining InterPrac from carrying on a financial services business would settle the licensee's future without a sale.

And whether Treasury's professional indemnity insurance consultation, which closed in February, produces anything that changes the answer for the next case. Sequoia flagged in December that it expected to pay a PI excess on Shield and First Guardian claims. A PI excess is not the same thing as cover, and the gap between what licensee balance sheets and PI policies can absorb and what large-scale advice failure actually costs is the gap the levy currently fills.