Ruling tracks Macquarie's governance as $321m remained invested in Shield Master Fund
ASIC's Mar. 20 ruling against Macquarie spotlighted investment governance failings in its $50.78bn superannuation platform and exposure to the collapsed Shield Master Fund.
In Australian Securities and Investments Commission v Macquarie Investment Management Limited [2026] FCA 303, Justice Wheelahan addressed contraventions of s 912A(1)(a) and s 912A(5A) of the Corporations Act 2001 (Cth).
The proceeding arose from the collapse in late 2024 of the Shield Master Fund, a registered management investment scheme. Keystone Asset Management Ltd was its responsible entity when, on 27 August 2024, the Federal Court appointed receivers and managers to all Keystone property held otherwise than as sole beneficial owner. Keystone is now in liquidation and the fund terminated.
Macquarie Investment Management Ltd, trustee of the Macquarie Superannuation Plan, a regulated superannuation fund under the Superannuation Industry (Supervision) Act 1993 (Cth), operated the Macquarie Wrap platform. At 31 August 2025 the plan had 123,620 members and $50.78bn in net assets. Section 912A(1)(a) required Macquarie to "do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly".
The Shield Master Fund offered four classes, namely, Conservative, Balanced, Growth and High Growth, added to the Wrap from 1 March 2022 and 6 May 2022 respectively. Between 1 March 2022 and 5 June 2023, approximately 3,060 plan accounts held investments. At 24 September 2025, 2,833 accounts still held investments with total net capital of approximately $321m.
Justice Wheelahan traced a web of entities associated with Paul Chiodo and Ilya Frolov. Keystone was wholly owned by Malana Management Pty Ltd, whose shareholders were Chiodo Corporation Pty Ltd and the Frolov Family Trust. Chiodo Corporation's sole shareholder was Pure Development & Project Management Pty Ltd, of which Mr Chiodo was sole director and shareholder. CF Capital Pty Ltd managed the Shield Master Fund and the Chiodo and Advantage Diversified Property Funds, of which Keystone was trustee, and a large proportion of fund assets went into the Advantage Diversified Property Fund.
Macquarie's Investment Governance Framework included a Watch List presented to monthly Investment Governance Team meetings, highlighting options where the Team was considering action such as applying limits, further due diligence, fund closure, or strategy changes.
Justice Wheelahan identified characteristics known to Macquarie warranting Watch List inclusion: the fund was new with no funds under management; product disclosure statements for the Conservative and Balanced classes contained differing statements regarding target asset allocations; documents contained inconsistent statements on fund manager identities; liquidity risks arose from proposed investment in the illiquid Chiodo Diversified Property Fund; and related-party relationships among Keystone, CF Capital and related entities created potential conflicts.
Despite those features, Macquarie did not place any Shield class on the Watch List at addition or during availability on the Wrap. Justice Wheelahan found Macquarie failed to ensure financial services under its licence were provided efficiently, honestly and fairly between 1 March 2022 and 5 June 2023, contravening s 912A(1)(a) and s 912A(5A).
On 24 September 2025, Macquarie offered ASIC a Court Enforceable Undertaking under s 93AA of the Australian Securities and Investments Commission Act 2001 (Cth), and ASIC accepted, requiring a payment program returning to each "Affected Investor" 100 percent of net capital invested through a cash-for-asset swap and ex gratia payment for any shortfall.
A report by Michael Potter of Ernst and Young dated 31 October 2025 confirmed payments to each Affected Investor met or exceeded their net capital amounts: $223,129,494.64 in the cash-for-asset swap and $97,640,681.01 in ex gratia payments, totalling $320,770,175.65, slightly above aggregate net capital of $320,764,258.17.
ASIC sought only declarations of contravention. Justice Wheelahan concluded that declarations served to record the Court's disapproval, vindicate ASIC's claim, assist ASIC in its duties regarding similar conduct, inform the public of harm from Macquarie's conduct, and deter other corporations from contravening the Corporations Act. The Court also ordered Macquarie to pay ASIC's costs.
