Storm Financial Group

[GumbyLearner]

Viva.... Dodge Vegas

http://www.abc.net.au/news/stories/2009/08/05/2646500.htm?site=local

While many Australians have been doing it tough during the economic downturn, it seems white collar criminals and organised crime gangs have been quietly getting on with business.

According to a Fraud Barometer devised by the accounting firm KPMG, major fraud may have exceeded $300 million since January 2008. That's $100 million for each of the six month periods surveyed.

KPMG's forensic auditors who have been running a fine tooth comb through company balance sheets have found both commercial businesses and government agencies to be key targets.

Much of the fraud detected is of the "inside job" variety where often trusted staff members manipulate accounting systems or deceive their employer to divert funds to their own bank accounts.

The survey found that 83 percent of frauds have occurred on Australia's eastern seaboard with Queensland the most popular state for fraud activities.

KPMG's national head of forensic, Gary Gill, says fraudsters are not just attracted to Queensland's tropical climate but also find it conducive to the development of financial scams.

"Investment scams are popular in the Sunshine State, with half of all investment scams identified in Australian occurring in Queensland," Mr Gill said.

Royal Commission bring it on!!

 

[Big Max]

Big Max, leave your emotion at the door.

I am only going off what my mother and sister told me while they were driving home. Again, and for the record, I totally agree with what SICAG is doing. I again, applaud SICAG for what you have done for the families affected. Good on SICAG for working with Slater and Gordon, it is appreciated by all involved.

What isn't appreciated are the Ron Jelich and friends who stood by and did nothing but count their bonuses, and accepted world trips as they geared their middle-aged and retiring clients to the wall. I KNOW there are prominent people in Redcliffe who were hospitalised and lost everything in this debacle. Guys like Ron Weir seem down the line. Unfortunately for you Big Max, you admit you worked for Storm in some fashion (it has been mentioned you were an ex-adviser?) so understandably you might be a little riled up to learn that perhaps you and you ex-colleagues may be found responsible in part for all this to some degree. I don't know your involvement with Storm/Ron Jelich (as there is conflicting info) so I won't jump to a conclusion.

I was told (as I indicated, I wasn't there) that from the words of a SICAG person there, that some members (re: not committee members per se) in SICAG who were of Storm affiliation were told to step down and keep away. And last time I checked, SICAG wasn't 'employing' people so the word 'sacked' seems a little over the top.

I won't retract anything. SICAG doing it's best for people (as it is doing) is to be applauded. Mate, I'll sit there and giggle like a schoolgirl when Manny is led into the docks, or his home at Belmont is sold from under him. Same for the advisers involved.

But if you think myself or other people affected are willing to let ex-Storm employees who for a long time benefited from their own negligence/stupidity/deceit, suddenly jump on the 'fighting for justice for the Storm clients bus', then you are terribly mistaken. SICAG doesn't offend me, I find them to be of noble intent and again (I don't know how many times I have to say it) I appluad what they have achieved. However, the grubs who have decided to cling onto the SICAG train who were responsible for the mess in the first place offend me to my core, and I can't wait to see these people get the born-again 'justice' they are so desperately suddenly seeking.

After 12+ years as a military officer, I have found it's in my best interests to remain unbiased, and to form analytical decisions based on the evidence at hand. The world isn't all roses as I have found, and people on this Earth are not all full of good intentions.

It's frustrating having to correct so many inaccuracies. I have never worked for Storm, was never a Storm adviser, never invested a drachma with EC, never had any connection with Storm (thank God). Where do you get your information from old mate? I am a paid consultant - the only person on the SICAG executive who is being paid. Not a bad effort for blokes like Mark (not Ron) Weir and Nobby O'Brien who have lost millions of dollars and yet continue to put thousands of unpaid man-hours into helping people like your rellies. Give SICAG a rest and get stuck into the real bad guys. Oh, and give me a ring any time to check facts - 0419 782729.

 

[GumbyLearner]

It's frustrating having to correct so many inaccuracies. I have never worked for Storm, was never a Storm adviser, never invested a drachma with EC, never had any connection with Storm (thank God). Where do you get your information from old mate? I am a paid consultant - the only person on the SICAG executive who is being paid. Not a bad effort for blokes like Mark (not Ron) Weir and Nobby O'Brien who have lost millions of dollars and yet continue to put thousands of unpaid man-hours into helping people like your rellies. Give SICAG a rest and get stuck into the real bad guys. Oh, and give me a ring any time to check facts - 0419 782729.

Well you are willing to give your time to this forum, which is admirable in itself.

The only problem is when you face a bunch of people from North Qld, the majority of which are from Townsville, and even then a solid subset are ex-military.

Break -em. That's right try to break them!

Battle?

In their eyes bring it on?

It is not so much a question of subjectivity? It's really a question of why have Australian Lending Rules stood up during this financial crisis.

Why you may ask?

because there are rules in this country and that has a lot to do with why the top 4 in OZ are top ten worldwide.

There are rules my friend and really those who were involved should really BE ****en scared because any litigator worth his salt is really going to bring it to public attention!

JMO

DYOR

 

[Big Max]

Well you are willing to give your time to this forum, which is admirable in itself.

The only problem is when you face a bunch of people from North Qld, the majority of which are from Townsville, and even then a solid subset are ex-military.

Break -em. That's right try to break them!

Battle?

In their eyes bring it on?

It is not so much a question of subjectivity? It's really a question of why have Australian Lending Rules stood up during this financial crisis.

Why you may ask?

because there are rules in this country and that has a lot to do with why the top 4 in OZ are top ten worldwide.

There are rules my friend and really those who were involved should really BE ****en scared because any litigator worth his salt is really going to bring it to public attention!

JMO

DYOR

Just for the record . . . I lived in the Townsville region for over 30 years, served as an officer in the Army Reserve and have been up as many dry gullies as the next bloke. I'm into FACTS, not hearsay and cheap shots. Let's all aim the M16s at the real bad guys - Storm and the banks. We are wasting a lot of time on who's who in the zoo at SICAG - it's not the main game in my humble opinion. Are you coming to the SICAG/Slater&Gordon meeting next Wednesday night? Come up and say "g'day". You too, GG and Ironhalo. See www.sicag.info for meeting information.

 

[abagnale]

No. The blame does not lie with systems. Thousands of people have used these systems and facilities responsibly and successfully.
People as Judd correctly points out, attempted to misuse these systems and fell on their faces.

If you are going to borrow far in excess of what you know you can reasonably pay back, or are counting on an always rising market to allow you to cover the outgoings, then that is simply taking a massive risk.

Even if the lending procedures of the banks were, as it appears, irresponsible, it's still up to the borrower to work out his/her capacity to service these borrowings.


Don't blame perfectly functional systems.

Julia, the systems I am referring to are the systems in place for the checks and balances that should be mandatory in the monitoring of these types of schemes or investments. I have no issue with margin loans, mortgages against assets, derivatives, double gearing, etc. These are all admirable vehicles to use to enhance wealth when used with extreme care and in the hands of the streetwise. But the manner in which these were used in the storm case leaves me to question who was monitoring their application, use and deployment. There appears to be some internal failure with in the CBA to allow the approval of these home equity loans to clients who should not have normally received them, the submission from the CBA appears to admit this.

I don't have a finance background but I am very suspicious of people claiming to make me wealthy and secure my future. As for the storm model where everything seemed to be in the one basket, the one stop shop, everything in house, with the same strategy for all, I would have walked out the door. In my field we rely on proven systems to ensure all goes well. People always make mistakes and make wrong judgments, that is why we rely on systems that employ multiple redundancies, roll backs, proven standard operating procedures, checklists and crosschecks, go and no go rules, etc. There are laws and severe penalties and consequences for non compliance. If we don't follow these systems people die. Simple as that. I gather there are a couple of others on this forum in the same field as me.

It appears to me that the storm experience was a live experiment using real people and their money using a model that was not fully beta tested before deployment and hit turbulence that the structure could not withstand. The crash investigators will pick over the hulk looking for clues, closely inspecting the pieces, analysing the recorded data and checking the logs etc . In this case the captain, crew and their service providers have all survived and will aid with the investigation into the hull loss, willingly I trust.

I can't blame people wanting to improve their lot in life and many saw storm as their saviour. There were some well respected names in the background, CBA, Colonial, other big banks, the principals appear to have been around for a long time in the business and many happy clients, etc. But it did come crashing down so to me there were not robust systems in place to prevent this from happening. You can't gamble with people lives whether it is financial or physical. People make mistakes that is why you need systems in place to, mitigate, transfer and avoid lethal errors. I don't have the answers to prevent this from happening again, I will leave this to experts in the field of regulation and compliance.

 

[Buckeroo]

As I don't ever get involved in financial houses like Storm (mainly because I've never trusted any of them since the 1989 collapse), I don't have too much to add except I think its absolutely awesome that there are 2866 posts with a grand total of 242,143 views.

Must be close to a record?

Cheers

 

[Solly]

Some catchup news links of interest;

"Storm lending case 'a Townsville issue'"

http://news.brisbanetimes.com.au/breaking-news-business/storm-lending-case-a-townsville-issue-20090812-ei89.html

"Lawyers meet with Storm investors"

http://www.theaustralian.news.com.au/business/story/0,28124,25921078-643,00.html

"Bank's last chance before legal storm"

http://www.news.com.au/business/story/0,27753,25916137-462,00.html

"Centrelink benefits cut short by pre-cost investment reporting"

http://www.moneymanagement.com.au/article/Centrelink-benefits-cut-short-by-pre-cost-investment-reporting/494225.aspx

"Bank of Qld 'hindering' Storm settlement"

http://www.abc.net.au/news/stories/2009/08/13/2654299.htm

"Storm Financial victims seek compensation from banks"

http://www.news.com.au/couriermail/story/0,23739,25927114-3122,00.html

"BoQ has week to respond to draft"

http://www.theaustralian.news.com.au/story/0,25197,25926556-5006786,00.html

"Storm investors rely on bank to reveal truth"

http://www.theaustralian.news.com.au/business/story/0,28124,25929813-36418,00.html

(I picked a bad time to go missing with all the action that's been happening

 

[Solly]

"BoQ denies sales talks for Townsville branch"

"Bank of Queensland has denied claims by Townsville businessmen that its controversial North Ward branch, which is at the centre of several investigations involving collapsed Storm Financial, is for sale."

See the article on page 42 of The Australian Financial Review of 14/8/09 by Duncan Hughes & Matthew Drummond.

 

[bunyip]

In its submission to the parliamentary inquiry into financial products and services, the bank admitted its system for valuing properties was misused by some staff to give bigger loans to Storm clients. Slater & Gordon lawyer Damian Scattini said in cases where a loan was inappropriately provided to a customer "you would be looking to put them in a position they would have been had they never have gone to that bank". He said in extreme cases this might involve dissolving the loan, "but that's one end of the spectrum and most things fall towards the middle".


Above is an extract from one of the links provided by Solly.

On the one hand, the banks need to be punished for any wrongdoing in giving extraordinarily large loans to Storm clients.
But on the other hand, why should anyone who was foolish enough to accept these large loans, get full compensation for their foolishness?

If a bank offers me a massive loan when my modest income means I have only limited loan-servicing capacity, am I going to be stupid enough to accept it? If I am, and I get into trouble, surely it's my fault just as much or more than the bank's fault.
Reading through all those submissions to the Parliamentary Inquiry, it almost beggars belief to see so many people who admit to being concerned about the size of their loans, but they went ahead with the loans anyway.
The large loans would have been risky enough even they were for relatively safe investments like real estate - but the people concerned invested these massive funds in the stock market, of all things! Some of them even cashed safe investment like real estate, and sunk those funds as well into stocks.
Not only that, but they had no risk management in place, such as selling out if their investment declined by a certain percentage.

Now they hold out their hands for compensation for their foolishness.
I'm not without sympathy for Stormers whose lives have been devastated, but surely there's such a thing as taking responsibility for our own actions.

I know it's all been said before on this thread, but it prompts me to say it again after reading through those submissions and hearing talk of full compensation.

 

[Anastasia]

"BoQ denies sales talks for Townsville branch"

"Bank of Queensland has denied claims by Townsville businessmen that its controversial North Ward branch, which is at the centre of several investigations involving collapsed Storm Financial, is for sale."

See the article on page 42 of The Australian Financial Review of 14/8/09 by Duncan Hughes & Matthew Drummond.

Wonder where this business is based?
http://www.seekcommercial.com.au/Business/Listing.aspx?ListingId=9150

 

[specialed]

In its submission to the parliamentary inquiry into financial products and services, the bank admitted its system for valuing properties was misused by some staff to give bigger loans to Storm clients. Slater & Gordon lawyer Damian Scattini said in cases where a loan was inappropriately provided to a customer "you would be looking to put them in a position they would have been had they never have gone to that bank". He said in extreme cases this might involve dissolving the loan, "but that's one end of the spectrum and most things fall towards the middle".


Above is an extract from one of the links provided by Solly.

On the one hand, the banks need to be punished for any wrongdoing in giving extraordinarily large loans to Storm clients.
But on the other hand, why should anyone who was foolish enough to accept these large loans, get full compensation for their foolishness?

If a bank offers me a massive loan when my modest income means I have only limited loan-servicing capacity, am I going to be stupid enough to accept it? If I am, and I get into trouble, surely it's my fault just as much or more than the bank's fault.
Reading through all those submissions to the Parliamentary Inquiry, it almost beggars belief to see so many people who admit to being concerned about the size of their loans, but they went ahead with the loans anyway.
The large loans would have been risky enough even they were for relatively safe investments like real estate - but the people concerned invested these massive funds in the stock market, of all things! Some of them even cashed safe investment like real estate, and sunk those funds as well into stocks.
Not only that, but they had no risk management in place, such as selling out if their investment declined by a certain percentage.

Now they hold out their hands for compensation for their foolishness.
I'm not without sympathy for Stormers whose lives have been devastated, but surely there's such a thing as taking responsibility for our own actions.

I know it's all been said before on this thread, but it prompts me to say it again after reading through those submissions and hearing talk of full compensation.

Bunyip, If you really understood this whole mess you would know that much of the distress felt by the storm victims, is not so much caused by the effect of the stock market crash but rather the margin call (or lack there of ) debacle caused by a panicking CBA. How can they, the storm clients "take responsibility for their actions" when the actions of the CBA and CGI ensured that the actions ( that is, the margin call facility) that Storm investors believed they had set in place to avoid this disaster was taken from them. It like instructing a broker to sell for you at two dollars but its done at 50 cents, or worse, asking to buy at 50 cents but they buy at two dollars then bill you for it. In all aspects of our lives, financial or otherwise we put in place mechanisms to protect us. If we fall asleep at the wheel then we should take responsibility for our actions…..but when someone else takes away your ability to save yourself then THEY need to be held accountable, and they should pay, not only for your actual loss but for all the pain and suffering they have caused along the way.

 

[Solly]

"BoQ chief in spotlight"

"THE managing director of the Bank of Queensland, David Liddy, will be called in front of a parliamentary inquiry into collapsed financial schemes, but the heads of other major banks may avoid the public scrutiny.'

Read more by Jacob Saulwick in the SMH here;

http://business.smh.com.au/business/boq-chief-in-spotlight-20090816-emc1.html

 

[Solly]

"Better radar would spot another Storm"

"Differences with ASIC may be emerging over responsibility for corporate supervision.
The regulator blames recent financial failures on factors other than its own stewardship.
The Investment and Financial Services Association has called on the securities regulator to boost its monitoring of the wealth industry in an effort to protect consumers from unscrupulous operators."

Read more by Sally Patten on page 44 of The Australian Financial Review of 17/08/2009.

 

[Kez180]

Just for the record . . . I lived in the Townsville region for over 30 years, served as an officer in the Army Reserve and have been up as many dry gullies as the next bloke. I'm into FACTS, not hearsay and cheap shots. Let's all aim the STYERS at the real bad guys - Storm and the banks. We are wasting a lot of time on who's who in the zoo at SICAG - it's not the main game in my humble opinion. Are you coming to the SICAG/Slater&Gordon meeting next Wednesday night? Come up and say "g'day". You too, GG and Ironhalo. See www.sicag.info for meeting information.

Fixed....

 

[Big Max]

Fixed....

STEYRS ... your fix is fixed!

 

[Ironhalo]

Hahahahaha!

 

[darkside]

Fixed....

OOOh, nearly slipped through to the keeper, nice catch !!!!!

 

[Solly]

ASIC's submission to the
Inquiry into Financial Products and Services in Australia

From page 14, " Criticism has been levelled at ASIC that it should have done more to prevent
the collapse of Storm and, possibly, Opes. ASIC rejects those criticisms."

http://www.aph.gov.au/senate/committee/corporations_ctte/fps/submissions/sub378.pdf

 

[Judd]

Page 36 of ASIC submission.

"The challenge for ASIC, Government and industry is to improve access to advice for retail investors...."

I wish that had read:

"The challenge for ASIC, Government and industry is to improve access to advice for those retail investors who elect to receive such advice...."

The rest is pretty much as I expected.

What none of the submissions actually spell out is that due to Governments of various persuasions continually changing the goal posts and the financial industry developing more and more complicated products, it is easy for the general punter: to think they need financial advice when probably they don't; start to believe the talking heads that they have to be self-funded retires; and poor old retirees. believing there is a safe way to get off the age pension when, of course, there isn't and in any case, if your 65+ yo and retired, it is way too late to do anything but accept that you are on the age pension.

 

[bunyip]

Bunyip, If you really understood this whole mess you would know that much of the distress felt by the storm victims, is not so much caused by the effect of the stock market crash but rather the margin call (or lack there of ) debacle caused by a panicking CBA. How can they, the storm clients "take responsibility for their actions" when the actions of the CBA and CGI ensured that the actions ( that is, the margin call facility) that Storm investors believed they had set in place to avoid this disaster was taken from them. It like instructing a broker to sell for you at two dollars but its done at 50 cents, or worse, asking to buy at 50 cents but they buy at two dollars then bill you for it. In all aspects of our lives, financial or otherwise we put in place mechanisms to protect us. If we fall asleep at the wheel then we should take responsibility for our actions…..but when someone else takes away your ability to save yourself then THEY need to be held accountable, and they should pay, not only for your actual loss but for all the pain and suffering they have caused along the way.

I'm well aware of the allegations against the banks in relation to margin calls, or lack of them.

My comments were in regard to people complaining about the banks lending them so much money, yet the investors went ahead with the loan in spite of feeling well outside their comfort zone.
If you think the size of these loans and the market crash had little to do with investors getting wiped out, you're dead wrong.
Sure, the situation was exacerbated by them not knowing they were in margin call. Whether that's the fault of the banks or the fault of Storm is another matter.
And it can't be denied that it's partly the investors fault....they had a responsibility to themselves to monitor their positions and keep in touch with their situation at all times.
Prudence should have dictated that they get out of the market well before they got near a margin call.
It's not acceptable to say they were leaving it all to Storm. A foray into the stock market is a business investment - just like any other business it needs careful monitoring by the owner, even when the owner employs the services of a manager.
Not everyone got into trouble buying stocks through margin loans. Many prudent investors used margin lending to good effect, and got out of the market when it showed clear signs of running into trouble.
The simple fact is that a market decline of well over 50% was going to put most people in trouble if they used the level of gearing that was common among Storm clients.
The market fell quite a bit further over the 3 months or so after clients were sold out. Realistically, many of them would have been battling to hang on, given their level of gearing.

As I've stated on a number of occasions, I'm not without sympathy for the plight that ex-Storm clients find themselves. But I do get rather tired of reading complaints against the banks for lending them so much money, given the fact that Stormers went against their better judgement by accepting those large loans. They must take their share of the responsibility for that decision, rather than simply dishing out blame to the banks for lending them so much.