Deloitte takes reins in Keystone administration amid ASIC probe
The Federal Court has removed KordaMentha as administrators of the troubled investment fund.
Deloitte has replaced KordaMentha as voluntary administrators for Keystone Asset Management, consolidating control over the restructuring process amid an ASIC investigation of misconduct in the private investment fund.
Financial advisory partners Jason Tracy and Lucica Palaghia, who were previously appointed as receivers and managers on 27 August, will serve as voluntary administrators following a Federal Court order last week.
ASIC is currently investigating Keystone’s management of the Shield Master Fund (SMF) and the Advantage Diversified Property Fund (ADPF), a wholesale property fund in which a large proportion of the SMF’s funds have been invested.
The watchdog alleges that “substantial investor funds have been misapplied”, including large sums paid to “lead generators”, conflicts of interest and a failure to maintain proper records.
ASIC also believes that the value of SMF’s assets is significantly less than the sums invested, leaving a substantial shortfall for unitholders and underlying investors.
It first took action in February to halt new offers of investments in Shield and made interim stop orders on four product disclosure statements.
The Federal Court subsequently appointed Deloitte duo Tracy and Palaghia in June to take control of Shield’s bank accounts and provide a report on Shield’s financial position.
Last month, Keystone’s directors unexpectedly appointed KordaMentha practitioners Scott Langdon, Michael Korda and John Mouawad as administrators almost immediately after the court appointed Tracy and Palaghia as receivers.
In court last week, the watchdog argued KordaMentha’s appointment would lead to a duplication of work and unnecessary costs to fund members.
It was also concerned that there may be disagreements between the different sets of practitioners about their powers and responsibilities.
“ASIC submits that, having regard to the significant work performed by Mr Tracy and Ms Palaghia, their familiarity with Keystone, the SMF and the ADPF, their earlier appointment by the court (at the request of Keystone), and their positions as officers of the court, Mr Tracy and Ms Palaghia should be appointed as the receivers and managers,” the judgment said.
Federal Court judge Mark Moshinsky sided with ASIC and said he was not satisfied that it was appropriate to appoint provisional liquidators to Keystone, instead appointing Deloitte as voluntary administrators in addition to their role as receivers.
ASIC’s investigation is ongoing.
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