Keystone AM to be wound up, advisers under investigation

ASIC has confirmed it is investigating the financial advisers who recommended investors to invest in the Shield Master Fund, as the responsible entity Keystone Asset Management is to be wound up. 

At a second creditors’ meeting on 2 December, a number of proposals were put forward as an alternative to winding up but it was judged that these were not in the best interest of credit, unitholders or Shield investors. 

Jason Tracy and Glen Kanevsky of Deloitte have been appointed as joint and several liquidators.

The regulator had applied for liquidation of Keystone back in September. 

ASIC is also concerned whether significant investor funds may have been dissipated, and alleges investor funds may have been misapplied. 

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

It confirmed it is investigating Keystone Asset Management, its directors and officers, the role of the superannuation trustees, the financial advisers who recommended investors to invest in Shield, the lead generators, and others.

Regarding the financial advisers, ASIC also noted it has come to the regulator’s attention that Venture Egg – a financial adviser who has advised clients to invest in Shield – has issued letters to investors on 29 November and 2 December, which it is concerned are incomplete and inaccurate. 

ASIC halted new offers of investment in Shield in February 2024 and made interim stop orders on four product disclosure statements for Shield. 

Last week, ASIC commissioner Alan Kirkland said the actions by advisers in recommending clients to invest in Shield Master Fund was not an isolated incident. 

Speaking at the FAAA annual conference, Kirkland said: “A recent investigation into the investments in the Shield Master Fund is a prominent example, where over $480 million was invested in this fund. Potential investors were called by telemarketers who referred them to financial advisers, who encouraged them to roll over their existing superannuation fund and to put some or all of their super into the Shield Master Fund.

“Our work on this matter involved a broad range of individuals and entities, and it’s important to note that some advisers have played a really crucial role in advising consumers to invest in Shield. 

“Our work on this matter involved a broad range of individuals and entities, and it’s important to note that some advisers have played a really crucial role in advising consumers to invest in Shield. 

“I wish I could say this is an isolated incident, but it’s sadly similar to a pattern of conduct we are seeing far too often where telemarketers recruit people and hand them over to advisers who encourage them to move their super into a platform product or SMSF product, where their retirement savings are then invested in high-risk property or crypto investment which are highly unlikely to be in their best interest.”