Background
Shield Master Fund (Shield) was a registered managed investment scheme listed on the following superannuation platforms:
• Macquarie Wrap
• NQ Super
• Super Simplifier
Equity Trustees is the trustee for both NQ Super (which is a division of the AMG Super Fund) and Super Simplifier.
Shield was issued by Keystone Asset Management (Keystone). Keystone was also the Responsible Entity for Shield, which had reported Shield funds under management of $326 million at the end of the 2022/23 financial year. CF Capital, a related party of Keystone, was the investment manager of Shield.
In November 2023 Equity Trustees raised concerns with ASIC about financial advice being provided to members by certain Venture Egg advisers. These advisers were authorised to provide personal financial advice by Interprac Financial Planning Pty Ltd, the holder of an Australian Financial Services Licence. Equity Trustees’ concerns related to the compliance of the advice provided by the Venture Egg advisers with the requirements of the Corporations Act and relevant industry standards It transpired that the majority of Venture Egg’s advice recommended members invest their savings into Shield. Around the same time, Equity Trustees ceased accepting member contributions from persons advised by Venture Egg.
In December 2023 SQM Ratings downgraded the rating of all classes of Shield to “Hold”. Equity Trustees immediately stopped all new flows into Shield, and a few weeks later removed it from the Investment Menu for NQ Super and Super Simplifier. Equity Trustees also reported the matter to ASIC at around the same time.
Between February and June 2024 ASIC took action to halt new offers of investments in Shield, stop redemptions and appoint Deloitte to approve any payments out of the Shield Fund. Investors have not been able to access the amounts they invested in Shield since February 2024.
ASIC has also notified Equity Trustees that it is investigating Equity Trustees’ conduct in relation to Shield, and has served us with notices to produce documents and witness examinations of certain current and former staff. The cover letters for the notices state that “ the notice should not be construed as an indication by ASIC that a contravention of the law has occurred, nor should it be considered a reflection upon any person or entity.” It is too early to determine whether ASIC’s investigation will take any other form.
On Tuesday 27 August 2024 the Federal Court appointed Deloitte as receivers of Keystone and subsequently on 5 September also as Voluntary Administrators.
The issue has received high profile media coverage by both the 7.30 report and The Age and in AFR (both owned by nine.com.au).
There are approximately 2,800 investors in NQ Super and 70 in Super Simplifier who are now not able to redeem their Shield units (valued at an estimated $150 million), and no clarity around the current value of those units. An accurate unit price will not be known for some months (and potentially even years), but it is expected to be substantially negatively impacted. The matter could take some years to resolve.
The Deloitte Administrators held the first meeting of creditors on 9 September 2024. The relevant notice and agenda for the first meeting (which was issued by former Administrators Korda Mentha prior to their removal) is available from the Deloitte Administrators, accessible from their webpage:
https://www.deloitte.com/au/en/services/financial-advisory/notices/keystone-asset-management-ltd.html.
At the first meeting of creditors, the Deloitte Administrators stated that, at this time, they expect to issue a report to creditors at the end of September, which has occurred. The second (virtual) meeting of creditors scheduled for 3 October 2024 has been postponed to 25 November 2024. That date may change.
At the second meeting, creditors will have the opportunity to make decisions about the future of Keystone and Shield.
Key Communication Dates
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First Significant Event Notice (SEN) sent dated 25 June 2024 - VIEW HERE
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Second Significant Event Notice (SEN) sent dated 12 August 2024 - VIEW HERE
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Third Significant Event Notice (SEN) sent dated 16 September 2024 - VIEW HERE
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Annual Member Statements – scheduled for November 2024
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