ASIC sues former directors of Shield Master Fund after thousands of Aussies lose retirement savings
The financial watchdog is suing the former managers of an investment scheme that failed after thousands of Australians lost their retirement savings.
The Australian Securities and Investments Commission (ASIC) has brought legal proceedings in the Federal Court against former Keystone Asset Management – Shield Master Fund directors Paul Chiodo, Ilya Frolov and Mark Yorston for alleged breaches of their duties as directors and officers.
Former compliance committee members Jeremy Danon and Mr Frolov will also face legal action for allegedly failing to fulfill their obligations.
ASIC alleges more than 5,800 people invested more than $530 million in the fund run by Keystone Asset Management.
The watchdog alleges that approximately $305 million of those funds were transferred to a related real estate development fund controlled by Keystone before being transferred to entities linked to Mr. Chiodo and Mr. Frolov.
It alleges that investor money was used for unauthorized purposes without a sufficient connection to the intended property development projects, including payments to related parties and third parties without the prior consent of scheme members.
ASIC said that by failing to obtain a valuation of Shield’s assets and failing to manage conflicts of interest involving Mr Chiodo and Mr Frolov, they had failed to ensure compliance with the Shield Compliance Plan.
ASIC chief executive Sarah Court said the case reflected alleged failures in how hundreds of millions of dollars of Australians’ super savings were handled and protected.
“Investors in managed investment schemes have the right to expect their investments to be carefully managed on their behalf, but in this case ASIC alleges investors have been subjected to conflicting regulations and poor oversight,” he said.
“We allege hundreds of millions of dollars in pensions have been transferred to relevant organizations without basic safeguards, exposing thousands of Australians to serious financial risk.
“These actions are about holding to account those we allege were involved and sending a clear message that managers running such schemes must act in the best interests of investors.”
