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Storm Financial Group

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This is a quote by a former Storm employee and CBA staffer (from this article)

http://business.smh.com.au/business/storm-blames-banks-for-margin-call-fiasco-20090902-f7wa.html

Ms Richards said Storm clients did not have to sign loan documents under Commonwealth Bank procedures.
Click to expand...

If thats true its a serious worry - I do not even fathom how that could be legal. I would be interested to hear CBA's clarification or response to that particular point - its sounds bizarre.

(and just because the banks may have made some glaring errors as well it doesn't let Storm off the hook in any way - it just means CBA weren't doing their job in preventing Storm from acting badly - a bit like a security guard reading the newspaper while criminal walks in and steals something - just because the security gaurd is negligent it doesn't absolve the criminal).
 
Julia said:
Ironhalo, you have provided a good summary of the Storm and SICAG models.

This, from the Courier Mail, is just a breathtaking statement imo:



This from Mr Weir confirms the aspersions cast on SICAG throughout this thread.

The other thing I will never understand is how Storm investors who were already well set up for retirement, more than adequately funded for same,
risked at least some of this with such massive borrowing to make even more
money.

It seems enough would never have been enough.
Click to expand...

Maybe this is a tactic to blame CBA to maximise their claim/case. But seems a very strange thing to say after the advice & investment model all came from storm.
 
The following is from the link in Solly's post 3137. Pick the discrepancy (hint: It is in bold)

Mr Dalle Cort, who termed himself ''Cairns' biggest loser'' after he was left with a loss of more than $450,000, blamed the collapse on the ''product failure'' of margin loans.

''We couldn't possibly know,'' he said. ''The data coming through from the banks was bizarre.''
Click to expand...

Cairns financial planner Jo Tuck, of Menico Tuck Parrish Financial Services, said she did not recognise the problems Mr Dalle Cort described with margin loans. ''Listening to Gus this morning, I didn't actually recognise his method of doing business,'' she said.

''We did have CGI (Colonial Geared Investments) loans, and we did have managed trusts and in November, as with a lot of planners, we were really very, very actively managing our margin loans. It's not that the product failed at the end of the day, it's that the strategy failed.''
Click to expand...
 
donteventryit said:
I look forward to commentary from the following:

Big Max
Mindstorm
Specialed
Maccka
Mash
Even what Harleyquin thinks after giving SICAG a big wrap earlier on page 151.

So, what's the agenda of SICAG again?

Yes, agreed they have helped support and console etc. However, their agenda to steer the blame to the banks and away from EC & JC and the adviser's is becoming crystal clear.
Click to expand...

Sorry, not sure why I am on your 'list'
 
As reported today: http://www.thedaily.com.au/news/2009/sep/02/aap-storm-founder-tried-to-save-customers/

"The inquiry also heard Storm Financial founder Emmanuel Cassimatis offered to take responsibility for his clients' mounting debts in a desperate attempt to save the company and its customers late last year.

David McCulloch, a former Storm executive, said Mr Cassimatis had offered to take over responsibility for the multi-million dollar debt from the bank, but would need to secure a loan to do so.

"It was probably a last throw of the dice by Storm," he said.

"(We said) 'You've got the debt on your books anyway, obviously Storm is a strong corporate entity, we will take on the debt and pay you back over two years or four years when the market eventually recovers'."

Am I going to be gullible and swallow the above by David McCulloch or should I state the obvious and comment that they were just trying to ensure their future income stream and keep viable those clients of more benefit to them. I personally know of clients offered money by Storm (but never actually received it) to meet margin calls and many others who were not. It is "strange" that those offered funds had quite a bit of potential for future growth/ Storm survival if the funds had come through.

Be prepared for more heart string pulling tomorrow by Manny....such a nice, salt of the earth human being.

The sarcasm meter is ticking away again!!!
 
Anastasia said:
Am I going to be gullible and swallow the above by David McCulloch or should I state the obvious and comment that they were just trying to ensure their future income stream and keep viable those clients of more benefit to them. I personally know of clients offered money by Storm (but never actually received it) to meet margin calls and many others who were not. It is "strange" that those offered funds had quite a bit of potential for future growth/ Storm survival if the funds had come through.

Be prepared for more heart string pulling tomorrow by Manny....such a nice, salt of the earth human being.

The sarcasm meter is ticking away again!!!
Click to expand...

I doubt that Manny had evil intent - I think he just believed his own BS all the way to the end. Like a lot of failed entrepeneurs they will point to the period 10 years down the track when the asset sold out from under them by the 'evil banks' for a song is now worth a lot more than they paid for it.

The same will probably apply to the portfolios that were sold out from under clients. Unfortunately sound financial advice does not involve hocking yourself to the absolute limit plus a little more (fudged income, fudged asset values, more lenient margin call conditions) to take a one way bet on a market.
 
Hi all, just wondering if anyone can tell me if they know of any live feeds for the inquiry tomorrow at the brisbane convention center?

If not can someone pack me a strong thermas of coffee heavily sugared, I am on nightshift at the moment and will need it to stay awake and hear all the BS from EC.
 
simcat said:
Has Mr Weir ever heard of the concept of 'justice'? Blame should be levelled at the parties responsible for causing this mess, irrespective of whether victims can receive money out of them.

If it so happens that some of the parties responsible also have the funds to make reparations ie the banks, then all the better but the principle of justice needs to be upheld, NOT the immoral act of 'let's forget about who is actually the major cause' ie Storm and it's dodgy advice.
Click to expand...

Simcat, 1st post and a good one, welcome aboard!:)
 
Julia said:
The other thing I will never understand is how Storm investors who were already well set up for retirement, more than adequately funded for same,
risked at least some of this with such massive borrowing to make even more
money.

It seems enough would never have been enough.
Click to expand...

This is something that intrigues me too......the number of people who were well set up for retirement by owning their own home and three or four investment properties, some of them even more - yet they went and risked it all in an attempt to build even more wealth.
Why would you do that, when you already had a net worth of a couple of million dollars and a reliable income of probably 50 grand plus? Why??

Fear of inflation eroding your income doesn't come into it - real estate is pretty much indexed for inflation via ever-increasing rentals and values.
Most people would give their right arm to be in that position....they'd kick back and enjoy the fruits of their labour and they'd never work again.

Can any Stormer who was in that position - out of debt and with enough real estate rental income to give you a comfortable lifestyle for the rest of your days - throw any light on what possessed you to put it all at risk to attain more wealth that you didn't need?
 
cuttlefish said:
From Julia's post:



That statement by Mark Weir, if true, is astounding Julia :eek:

Its all well and good for SICAG and some ex-stormers to blame the banks but this mess would never have occurred in the first place if:

* Storm had tailored financial plans to suit the individual clients stage of life, personal goals and personal risk appetite

* Storm had not participated in the misrepresentation of clients income streams or asset values and/or aggressively encouraged clients to misrepresent their income streams and asset values to the banks.

* Storm had not formed innappropriate relationships with their banking partners and arguably crossed boundaries of due process in dealing with the banks. (e.g hiring of ex-bank staff etc.).

* Storm had not encouraged the banks into providing high risk lending products to clients that they were aware were not of the calibre or sophistication to understand these products or equipped to service the debt requirements in the event of asset price collapses.

* Storm had not failed to adequately monitor clients investments and take appropriate risk mitigation measures to prevent loss of clients investments.


Storm is the biggest cause of this problem as far as I can see.

The whole ludicrously risky investment model was formulated by Storm and then aggressively pedalled as a one size fits all investment model.

There are plenty of submissions and anecdotal evidence that Storm advisors knowingly participated in or encouraged the misrepresentation of income streams. If Storm were a responsible financial advice firm they would not have allowed CBA to make these sorts of loans to their clients even if CBA were aggressively pushing the loans onto the clients. Instead in fact Storm was actively encouraging CBA to provide these products and encouraging their clients to take them up. Storm was the middle man acting irresponsibly to both parties (the clients and the banks).

Storm can't have it both ways. If they were the financial advisor then their job was to know a clients financial circumstances and thus recommend AGAINST taking out these high risk loans for people that were not at a stage of life or of the financial means or sophistication to understand them or service them.

Had Storm acted responsibly in the first place when advising and dealing with clients then the entire snowball effect of stock price collapses, banks making ill timed margin calls and the other 'big bad bank' problems that have been harped on about simply would not have occurred.
Click to expand...

Thanks cuttlefish. The statement by ex storm employees in Townsville today appeared to be orchestrated as a Tweedledum exercise.

From the body language of the Inquiry people it was not swallowed.

Many of the submissions seemed to have been made in preparation for a response by the Tweedledee , the old Manny C. tomorrow in Brisbane.

Solly said:
I look forward to gg's commentary on today 's developments....
Click to expand...

It was quite a disgrace really that the SICAG model in all its glory was represented, slay the banks, who by the way I feel are not blameless and exonerate Storm as a charity beset by evil lenders.

Solly said:
"Storm blames banks for margin call fiasco"

From STUART WASHINGTON IN TOWNSVILLE for The Age.

"Storm Financial had no formal process about margin calls being made to their clients as the market fell, with former Storm staff arguing today margin calls were the sole responsibility of their margin loan providers."


http://business.theage.com.au/business/storm-blames-banks-for-margin-call-fiasco-20090902-f7wa.html
Click to expand...

This alternate view was not well elaborated today, although from press reports was yesterday in Cairns.

The question remains, if Storm were handling these folks portfolios , what were they getting 7% commission for? Certainly not for monitoring the buffers of clients which to me would appear to be a primary function of a labelled advisor with labelled funds and labelled margin loans with banks.

Anastasia said:
As reported today: http://www.thedaily.com.au/news/2009/sep/02/aap-storm-founder-tried-to-save-customers/

"The inquiry also heard Storm Financial founder Emmanuel Cassimatis offered to take responsibility for his clients' mounting debts in a desperate attempt to save the company and its customers late last year.

David McCulloch, a former Storm executive, said Mr Cassimatis had offered to take over responsibility for the multi-million dollar debt from the bank, but would need to secure a loan to do so.

"It was probably a last throw of the dice by Storm," he said.

"(We said) 'You've got the debt on your books anyway, obviously Storm is a strong corporate entity, we will take on the debt and pay you back over two years or four years when the market eventually recovers'."

Am I going to be gullible and swallow the above by David McCulloch or should I state the obvious and comment that they were just trying to ensure their future income stream and keep viable those clients of more benefit to them. I personally know of clients offered money by Storm (but never actually received it) to meet margin calls and many others who were not. It is "strange" that those offered funds had quite a bit of potential for future growth/ Storm survival if the funds had come through.

Be prepared for more heart string pulling tomorrow by Manny....such a nice, salt of the earth human being.

The sarcasm meter is ticking away again!!!
Click to expand...

A reasonable comment Anastasia.

From the body language of the Inquiry staff and the comments of Storm victims , the SICAG model, had its best run today and failed to convince. Some of the witnesses appeared tainted and hesitant and it will be interesting to see how the days events appear in the Report.

The final decision on whether the SICAG model will be successful will depend on how Manny performs tomorrow. Lets hope someone pours some oxygen into the Inquiry room in Brisbane to make him spark.

The advisors and public servants were exemplary and stayed aloof from lurkers like me, and I was unable to get any off the record information.

It really is a very well run Inquiry and the truth will out.

I also believe from what I heard today that Criminal Charges will be in the offing at its completion.

gg

gg
 
bunyip said:
Can any Stormer who was in that position - out of debt and with enough real estate rental income to give you a comfortable lifestyle for the rest of your days - throw any light on what possessed you to put it all at risk to attain more wealth that you didn't need?
Click to expand...

Bunyip and Julia I understand the question and I suspect you'll get a variety of answers (I can think of plenty ranging from wanting to travel the world in retirement, to wanting to provide for the kids/grandkids), but there's few people in the world that can't find a reason to have more money. I think it could be rubbing salt into a pretty harsh wound - particularly for the people arguably already had it all and lost it - to be asking this question.
 
CONFIRMED

Public hearing - Brisbane, Thursday 3 September 2009
9:00am – 4:30pm
Brisbane Convention & Exhibition Centre - P3&4 Room
Cnr Merivale & Glenelg Streets
Brisbane QLD 4101

Time:
9:00am – 10:30am
Witness:
Mr Emmanuel Cassimatis
Mrs Julie Cassimatis
 

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