The Australian Securities and Investments Commission (ASIC) is suing Paul Chiodo, Ilya Frolov, and Mark Yorston, former directors of Keystone Asset Management Ltd 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.

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.

In total more than $530 million in retirement savings from around 5,800 investors flowed into the Shield Master Fund. 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 is seeking civil penalties, disqualification orders against the former directors and costs.

ASIC’s investigations into the matters connected to Shield are continuing.

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.

In June 2024, ASIC took action to protect investor funds. 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.

Approximately 3,000 investors have had $321m of their invested capital in Shield returned after Macquarie entered into a Court Enforceable Undertaking with ASIC. 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.