Former Keystone Asset Management directors and compliance committee members put hundreds of millions of dollars of Australians’ superannuation at risk by investing scheme funds in related entities and third parties without proper safeguards, ASIC alleges in new Federal Court proceedings.
ASIC is suing Paul Chiodo, Ilya Frolov, and Mark Yorston, former directors of Keystone Asset Management Ltd (Receivers & Managers Appointed) (In Liquidation) (Keystone Asset Management) for allegedly breaching their director and officer duties, and Jeremy Danon and Mr Frolov, former compliance committee members for allegedly failing to meet their obligations.
In total more than $530 million in retirement savings from around 5,800 investors flowed into the Shield Master Fund (Shield). Shield was operated and managed by Keystone Asset Management.
ASIC alleges around $305 million of those funds were transferred to a related property development fund controlled by Keystone Asset Management, before being transferred to entities linked to Mr Chiodo and Mr Frolov. ASIC further alleges:
- the funds were transferred without basic safeguards including proper security, valuations, oversight, or management of conflicts
- investor money was used for unauthorised purposes without a sufficient connection to the intended property development projects, including payments to related parties and third parties without the required prior approval of scheme members, and
- failures to ensure compliance with the Shield Compliance Plan by failing to obtain valuations of the assets of Shield and manage conflicts of interest involving Mr Chiodo and Mr Frolov.
ASIC Chair Sarah Court said the case reflects alleged failures in how hundreds of millions of dollars of Australians’ super savings were handled and protected.
‘Investors in managed investment schemes are entitled to expect that their investments will be carefully managed on their behalf but, in this case, ASIC alleges investors were exposed to conflicted arrangements and poor oversight.
‘We allege hundreds of millions of dollars of superannuation was transferred to related entities without basic safeguards, exposing thousands of Australians to significant financial risk.
‘These proceedings are about holding those we allege to be involved to account and sending a clear message that directors operating schemes of this kind must act in investors’ best interests,’ the Chair said.
ASIC is seeking civil penalties, disqualification orders against the former directors and costs.
ASIC’s investigations into the matters connected to Shield are continuing.
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Background
Shield is a registered managed fund, which was registered in May 2021. In April 2025, the liquidators of Keystone Asset Management (Liquidators) determined it was in the best interests of investors for Shield to be terminated.
In February 2024, ASIC halted new offers of investments in Shield. ASIC made interim stop orders on four product disclosure statements for Shield (24-018MR).
In June 2024, ASIC took action to protect investor funds (24-137MR). As a result of ASIC’s action, shares in a share trading account were preserved for the benefit of investors. The Liquidators have subsequently sold those shares and deposited the proceeds of nearly $200m in interest-bearing accounts for the benefit of Shield unitholders. The Liquidators have made an application for an interim distribution to qualifying unitholders. The Liquidators have also commenced proceedings to recover assets for the benefit of investors, including taking action to preserve up to $158m of additional assets. Those proceedings are ongoing. Information about the liquidation process is available on A&M’s website.
Approximately 3,000 investors have had $321m of their invested capital in Shield returned after Macquarie entered into a Court Enforceable Undertaking with ASIC (25-215MR). ASIC also has ongoing proceedings in the Federal Court against Equity Trustees Superannuation Limited seeking declarations, compensation orders and civil penalties in relation to Shield (25-176MR).
Compliance committees play a critical gatekeeping role in ensuring a responsible entity’s compliance with its obligations: see RG 132 Funds management: Compliance and oversight. ASIC also recently published Review of managed fund compliance plans: ‘Failing to plan is planning to fail’. The adequacy of compliance plans is of fundamental importance to the regulatory framework governing registered managed investment schemes.
Consumer information
- ASIC has issued a consumer alert warning amid increasing concerns that people are being enticed to invest their retirement savings into complex and risky schemes: 25-120MR Consumer alert – ASIC warns about pushy sales tactics urging people to make quick superannuation switches. Be super smart, visit ASIC’s Moneysmart campaign page.
- Stay Updated: ASIC will post important updates on its dedicated webpage: Shield Master Fund.