ASIC concern over Shield Funds “shortfall”

The Australian Securities and Investments Commission (ASIC) has expressed concern that “there is a substantial shortfall” in monies invested in the Advantage Diversified Property Fund which was a destination for funds invested by the Shield Funds.

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

At the same time, the regulator said it is investigating the circumstances surrounding Shield.

“ASIC is investigating [Keystone Asset Management] 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 said.

“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 said.

“ASIC is concerned that the information in the letters is incomplete and some of the statements in the letters are inaccurate. Investors who have queries about their investment or the liquidation of KAM should contact the liquidators of KAM at ,” the regulator said.

ASIC noted that a second creditors’ meeting of KAM had resolved to wind up the company and appoint Jason Tracy and Glen Kanevsky of Deloitte as joint and sveral liquidators.

“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 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.

“ASIC has taken a range of Court actions in respect of Keystone and in seeking orders from the Court, ASIC 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, and
• investor funds may have been misapplied.