ASIC intervenes on Shield director promoting guaranteed 13 pc returns on new funds

ASIC has sought Federal Court orders to restrain Shield director Paul Chiodo from promoting new funds over concerns about alleged unlicensed conduct and that the products were promising high guaranteed returns and providing financial services without a licence.

The orders would restrain Royce Capital Investments, Royce (Aust) Real Estate (RARE), Louie Kortesis and Chiodo from advertising, promoting or accepting money for financial products in Australia.

ASIC alleged Royce Capital and RARE made misleading or deceptive representations in brochures provided to some investors, including to the effect that they would receive a guaranteed or fixed return of 13 per cent p.a.

It’s further alleged that in August 2025, Royce Capital Investments raised $1.54 million from five Australian SMSF investors, purportedly for investment in one or more of the above offshore funds.

ASIC alleged that Royce Capital Investments provided financial services without holding an AFSL, and that Kortesis and Chiodo were involved in Royce Capital’s alleged unlicensed conduct.

Royce Capital Investments and RARE manage Royce Global Investments LP and Royce Global Real Estate LP, which are both registered in the Cayman Islands, and Royce Private Investments Fund LP, which is registered in Delaware, USA.

Court documents allege that brochures for the funds promoted a luxury hotel development in Fiji but failed to disclose related-party investments to the Advantage Diversified Property Fund that was a sub-fund of the Shield Master Fund and that its responsible entity, Keystone Asset Management, was in liquidation.

It’s also alleged Royce Capital paid most of the investor funds into a bank account in the name of a company controlled by Chiodo which was used to pay for legal fees and personal expenses, as well as other debts related to Keystone’s voluntary administration.

Last month, ASIC revealed it was suing directors and compliance committee members of Keystone for misuse of investor money.

Part of that suit includes an allegation that Chiodo Corporation made payments totalling almost $65 million to lead generators.

AFCA similarly has alleged that Chiodo-run CF Capital was the source of lead generation for Shield investors.

Last year, Chiodo tried to propose a deal with the fund’s liquidators, Alvarez & Marsal, to return investor capital “before Christmas”, pending agreement with ASIC and the liquidator.

The regulator denied it had any involvement in any negotiation, as did the liquidator, who said Chiodo’s statements to the media contained “numerous inaccurate and misleading statements” which required correction.

Investments in Shield and First Guardian grew due to a sophisticated network of lead generators that contacted people who used online “superannuation health check” advertisements and applied high-pressure sales tactics to refer them to financial advisers.

ASIC acted against the funds over concerns investor money was being misused on high-risk investments, pet projects of directors and personal expenses, and court proceedings against both funds are ongoing.

While both funds have been tied together in the collapse, they had separate responsible entities and directors.

Liquidators for Shield have a more optimistic position for recovery, expecting to return around 70 cents on the dollar, as opposed to First Guardian liquidators who have only recovered a few million out of the approximately $450 million that was invested.

Macquarie, which only onboarded Shield, has repaid investors $321 million in initial capital invested in the fund, while Equity Trustees, the other trustee that onboarded the fund, is fighting allegations of wrongdoing in court.

The regulator has also acted against lead generators, advisers and licensees allegedly responsible for distributing the funds, as well as “gatekeepers” including the four trustees that onboarded the funds and SQM Research for research reports ASIC has alleged are inadequate.