ASIC announces Keystone Asset Management to be wound up

Following a second creditors’ meeting of Keystone Asset Management (KAM) on Monday, the Australian Securities and Investments Commission (ASIC) has noted that the creditors resolved to wind up KAM and appoint Jason Tracy and Glen Kanevsky of Deloitte as joint and several liquidators.

According to the corporate regulator, a number of alternative proposals were put to creditors at the meeting on Monday, however, the administrators “were of the view that they were not in the best interests of creditors, unitholders or underlying investors in Shield and recommended that KAM be wound up”.

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ASIC said it is investigating whether significant investor funds may have been dissipated.

In February 2024, ASIC halted new offers of investments in Shield Master Fund, of which KAM is the responsible entity, and made interim stop orders on four product disclosure statements for Shield.

In June 2024, ASIC took action to secure the assets held within Shield. ASIC sought the appointment of Jason Tracy and Lucica Palaghia of Deloitte as receivers and managers of the property of KAM.

“ASIC understands that, since February 2022, funds totalling more than $480 million have been invested into Shield by at least 5,800 consumers, who accessed Shield primarily through superannuation platforms, the trustees for which were Macquarie Investment Management Limited and Equity Trustees Superannuation Limited,” the regulator said.

“The investigation to date suggests that potential investors were called by lead generators and referred to personal financial advice providers who advised investors to roll their superannuation assets into a retail choice superannuation fund and then to invest part or all of their superannuation into Shield.”

As a result of this, ASIC said its investigation of the circumstances surrounding Shield include KAM and its directors and officers, the role of the superannuation trustees, the financial advisers who recommended investors invest in Shield, the lead generators, and others.

“It has come to ASIC’s attention that Venture Egg (a financial adviser who has advised clients to invest in Shield) has issued letters to investors dated 29 November 2024 and 2 December 2024,” ASIC added.

“ASIC is concerned that the information in the letters is incomplete and some of the statements in the letters are inaccurate.”

The regulator also detailed the court actions it has taken regarding Keystone, noting that in seeking orders from the court, it alleged that:

• KAM is the trustee of the Advantage Diversified Property Fund (ADPF), a wholesale property fund into which a large proportion of Shield’s funds has been invested.
• The ADPF has made loans to various companies associated with Paul Chiodo (former director of KAM) to fund property development projects in Fiji, Italy, Port Douglas, and Melbourne.
• Substantial sums appear to have been spent on property developments without written contracts, and in the case of the Port Douglas development, without the requisite development approvals to proceed.
• There is a substantial shortfall when comparing the monies invested in the ADPF against the value of the assets of the ADPF.
• Investor funds may have been misapplied.

ASIC said the administrators and receivers commenced proceedings in the name of KAM against Paul Chiodo and Chiodo Corporation, City Built and Robert Filippini (the director of City Built, who is involved in the construction of the developments) and related parties. As part of this proceeding, the administrators and receivers identified and obtained freezing orders over funds in bank accounts held by Filippini and related entities.

In October, ASIC cancelled the AFSL of Queensland-based Next Generation Advice (NGAA), which is in liquidation and had recommended investments that included the Global Capital Property Fund and the Shield Master Fund.

ASIC has specified that the licensee must continue its membership of the Australian Financial Complaints Authority (AFCA) until 17 October 2025.