ASIC has alleged Shield and First Guardian mismanaged the funds and spent investor money on the founders’ pet projects, a luxury lifestyle and huge payments to the scheme’s promoters and financial planners to drive people into the fund.
Shield founder Paul Chiodo and his former business partner, First Guardian manager David Anderson, are under investigation by the watchdog over their alleged mismanagement of the scheme. Both deny any wrongdoing.
Numerous financial planners and people who marketed the scheme to investors are also being probed and some are already subject to court action by the regulator.
This masthead was the first to reveal ASIC’s look into the Shield Master Fund in August 2024 with investigations alleging large sums of the fund’s money had been improperly directed into Chiodo’s portfolio of property developments, including high-end resorts in Fiji, K’Gari, Port Douglas and Venice.
ASIC has also alleged that $154 million of investor money was given to an unlicensed builder while there were no contracts in place to perform any work and that investor money was spent on events featuring international sports stars, including Chicago Bulls star Josh Giddey and boxer Floyd Mayweather.
Last month, this masthead revealed Chiodo and Anderson had been business partners over several years, running joint ventures, buying property and using the same group of financial planners and marketing experts to pump money into their funds and resolve a business dispute between them.
The investigation also traced the origins of the two funds’ incredible growth to a meeting in a Melbourne mosque and the inner workings of the marketing campaign, set up by financial planning boss Ferras Merhi and marketing guru Rashid Alshakshir, that drove thousands of unsuspecting investors into the funds.
Alshakshir is currently subject to asset freezing orders. ASIC took further action against Merhi earlier this month in the Federal Court where it is seeking to ban him from the industry. He denies any wrongdoing and has long blamed Macquarie for allowing investment into the funds.
Court said in a briefing on Thursday that the Macquarie compensation package should not be seen as a win for those behind the scheme.
“The significance of this result, to some extent, is that Macquarie is making those investors whole, despite the culpability of many in that chain.
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“But don’t let that suggest or send a message at all that we are letting anyone off the hook. We are pursuing these matters with vigour and intensity. We will be hopefully holding all of the players in this sorry chain to account.”
Macquarie said in a statement the payments would be made in full by September 30.
“Macquarie’s decision to devote resources to achieve this outcome recognises Shield’s unique circumstances, notably the scale of the issue, its material impact on many investors and their limited access to recourse from the many different entities which played a role,” Macquarie said.
“To enact the payments, Macquarie will purchase the investors’ holdings in Shield at the current fair value, which is based on the estimated ultimate recovery from the liquidation process.”
The Shield Master Fund was made available to financial planners on Macquarie’s platform, which offers a range of investment products that can be recommended to clients. Macquarie received fees when planners selected a fund offered on its platform.
The fund was offered between 2022 and 2023 before Macquarie removed it from its platform amid concerns about the fund’s huge growth from less than $40 million under management to $500 million in only two years.
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