Source : Perth Now news
The financial watchdog is suing the former directors of a failed investment scheme after thousands of Australians lost their retirement savings.
The Australian Securities and Investments Commission (ASIC) launched legal action in the Federal Court against former Keystone Asset Management — Shield Master Fund directors Paul Chiodo, Ilya Frolov and Mark Yorston for allegedly breaching their director and officer duties.
Former compliance committee members Jeremy Danon and Mr Frolov also face legal action for allegedly failing to meet their obligations.
ASIC claims more than 5800 people invested over $530m into the fund that was operated by Keystone Asset Management.
The watchdog alleges about $305m of those funds were transferred to a related property development fund controlled by Keystone, before being transferred to entities linked to Mr Chiodo and Mr Frolov.
It claims 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 prior approval of scheme members.
ASIC says they failed 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 reflected 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,” she said.
“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.”
