The director of Shield Master Fund’s responsible entity (RE) has proposed the deal with liquidators to return investor capital “before Christmas”, pending agreement with ASIC and the liquidator of the RE, Keystone Asset Management.
Keystone director Paul Chiodo, who is under investigation for his role in the collapsed scheme, said he would formally present his proposal to a mediation next week.
Involved in the proceedings will be Keystone liquidator Alvarez & Marsal, as well as representatives of City Built (including director Robert Filippini), the construction company used by Chiodo Corporation in Shield’s property projects.
Some $110 million in accounts belonging to City Built’s owners has been frozen by the liquidator, which is suing the construction company for the return of the money.
The deal will purportedly see 2800 Shield unitholders on Equity Trustees platforms paid back before liquidators and creditors, and the unitholders receiving $110 million from Chiodo Corporation, via City Built, as a repayment of project loans advanced from Shield to Chiodo Corporation.
Chiodo said exchange traded funds held by Shield, worth $210 million, would be sold and the $17 million held in SMSFs by Shield investors would be covered.
However, ASIC disputed it had anything to do with negotiations.
“We are concerned that investors may have been misinformed by the ‘media statement’ and have referred it to the liquidators/receivers,” an ASIC spokesperson told Professional Planner.
“ASIC is not a party to the liquidators’/receivers’ proceedings against Mr Filippini, his entities and associates and Mr Chiodo and Chiodo Corporation.”
The proposed settlement was conditional on ending the liquidation. Alvarez & Marsal did not respond to requests for comment.
Investors on Equity Trustees platforms – DASH’s Super Simplifier and NQ Super – would be the beneficiaries as Macquarie has already made a deal to remediate Shield investors on its platform.
“The judge has urged us to mediate this matter, and the only settlement that makes sense is to make the Shield unitholders whole,” Chiodo said in the media statement.
“Shield is a unique case because even though it was wound up by ASIC in 2024, and placed into liquidation, it still has considerable assets which must be used in the best interests of the investors.
“The rules of liquidation hold that creditors are paid ahead of equity-holders, however my deal will direct the frozen $110 million and the $210 million in ETFs, to the unitholders first.”
ASIC commenced stop orders against the Shield and First Guardian funds due to concerns of mismanagement of investor money.
While advisers including Ferras Merhi, who appeared in court on Thursday, are alleged to have been a central part of distribution of both funds, the management of the two funds were handled by different parties, although base allegations for misusing investor money for personal expenses and pet project investments.
David Anderson and Simon Selimaj, directors of First Guardian’s responsible entity Falcon Capital, are under investigation, are under travel restraints and have had their assets frozen.
