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Storm Financial Group

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Mindstorm said:
Bunyip,

I can only speak for my own family, and we would like to see justice, and only justice.

I also believe that justice is what many of the former storm clients we've met, who've had dealings with some of the biggest, and who we thought were the most trustworthy, banks in Australia.

We've never expected anyone to pay our way through life. Like many former storm clients we've met since this all went down the tube, we were all just trying to make sure that we could retire with no monetary worries, and at no burden to the Australian taxpayers of the future.

I am being very careful of what I say here. I have to be that way because one of the biggest banks in Australia is holding my family to ransom right now, and I have a further fight with another of their ilk in the future.

We have to do exactly what they say, or suffer their full wrath.

They have more money than us, (their shareholders, so they are not gambling with their own money!), they are more powerful than us, what would you advise us to do?

We 'stormers' as you call us, have been taken to the wall, financially, emotionally, physically, (health wise), and not neccessarily in that order. We live on a rollercoaster, we never know from one day to the next what will be asked or expected of us.

Do you really believe that the majority of us would have put ourselves through of all this anguish if we had not been duped by storm and the banks, and that we felt that we had not been TRULY represented by those who we trusted?

Sure, even I have to admit that there were Storm clients who were already financially secure, and yes, they were greedy to want more than they needed to fund a secure retirement.

But, Bunyip, those clients are a very small minority in the scheme of things.

Please try to look at the bigger picture.

I don't want, and never expected, to find myself in the position where YOU were funding MY retirement. I thought I had that base covered.

In fighting for my family to get justice from the banks, I am also fighting for YOU so that you don't have to pay for my/our retirement.

MS
Click to expand...





Mindstorm

I'd be wanting justice too if I felt that somebody had done the wrong thing by me and caused me to lose a lot of money.
But justice is only good if it's dealt out to the right people.

Whenever there's talk of justice for Storm causalities, it invariably seems to be centred around taking action against the banks.
I'm no apologist for the banks, nor am I naive enough to claim they're blameless. But I cannot see that they're the main reason why Storm clients were wiped out. Therefore I feel they shouldn't be copping all the blame or bearing the brunt of the legal action to get justice for former Storm clients.

Here are a couple of criticisms that I've seen repeatedly levelled at the banks in relation to their dealings with Storm Financial clients......

1. The banks shouldn't have lent us so much money.

Well OK, perhaps they shouldn't have. But like all businesses, banks have a product to sell, and that product is loans. The more product they sell, the more profit they make, just like any other business.
If I approach a furniture shop to buy a new dining room suite, and they end up talking me into a time payment plan that allows me to buy a new lounge suite and a new bedroom suite as well, plus a couple of grands worth of outdoor furniture for my entertainment area, whose fault is that? Can I blame them for selling me more product than I really wanted or could reasonably afford? Or should I blame myself for recklessly purchasing so much furniture that I'll be battling to pay it off?

If Storm clients or their representative applied for a bank loan, and figures were provided to the bank to show how the loan commitments would be met, have the bank really done anything wrong in granting the loan?
If the bank falsified figures such as the clients income or house valuation, then certainly the bank is guilty of immoral and illegal conduct, and should be brought to account.
But I've never seen any Storm client who can provide evidence of a bank falsifying figures on loan applications. Without evidence, how can the bank be seen as guilty?

2. The banks sold down our investments near the bottom of the market.
The bank shut down the fund we were invested in.

OK - I can well imagine the shock and anger you'd feel if your investment was sold out from under you, particularly if you weren't even in margin call and had never defaulted on your loan commitments.
But here again, we need to ask if the bank had good reasons for taking this action, and if they were legally entitled to do so.

In regard to the funds that were closed down - I'd be pretty sure that under the terms and conditions of the funds, the banks were legally entitled to close the funds at their discretion.

With regard to margin calls, many Storm clients have stated that nobody told them they were in margin call.
The banks claim they told Storm when clients were in margin call, and that Storm failed to pass this information on to their clients.
A few months ago on this thread, someone posted a copy of a bank document on margin loans - as I recall, the document clearly stated that it was the clients responsibility to monitor their investments to ensure that they didn't go into margin call, and if they did go into margin call, to deposit funds into their accounts within a defined time to cover the margin call. Otherwise the bank would exercise its right to sell down the investment.

This appears to be what happened. Accounts went into margin call, margin calls were not met because clients were not told about them, and had not monitored their situations themselves to know when a margin call was imminent. So the banks sold down the investments to protect themselves from further downside risk.
Here again, the question is whether this action was fair and reasonable by the banks, and was it legal? As near as I can tell from the copy of the loan documents I've seen, it appears that the banks were well within their rights to sell down the investments if they were in margin call that hadn't been met.

I can't claim to know the exact details of the dealings and the agreements between Storm clients and banks. I'm happy to concede that some of what I've said above may not be entirely correct. I can only offer an opinion based on the information I've seen so far.

One thing I do know with certainty, however, is that if you invest in any business, as the owner of that business you have significant responsibility to make sure you know something about the business, and to ensure you keep yourself updated with developments in your business. This holds true regardless of whether you manage the business yourself, or employ a manager to run it for you.
Employing a manger does not absolve the business owner from the responsibility of keeping his finger on the pulse, particularly in regard to risk management.

Anyone who knows investment and finance will be aware that poor risk management was the primary reason for the wipe-out of Stormers portfolios.
Risk management was the responsibility of Storm Financial first and foremost - you were paying them to manage your business, after all.
Secondly, risk management was the responsibility you, the owner of the business. Part of risk management involved, or at least should have involved, keeping a very close eye on your manager to make sure he was doing the job you were paying him for.

I owned and managed a grazing property in western Queensland. One of my neighbours was a fifty thousand acre property that employed a manager.
The owners of the property flew out from Brisbane once a month to check up on the manager and make sure he was running the property to their satisfaction. Had he let their livestock start dying in a drought, or in some other way mismanaged their business and started losing them money, there's no doubt that they would have over-ruled his management decisions, or probably even fired him.

The problems of Storm clients began when their business manager, Storm Financial, allowed their business to be decimated once the global financial meltdown set in.
Storm could have taken action to protect their clients from catastrophic downside risk. For whatever reason, they failed to do so. Clients themselves also failed to do so.

Practically no risk management during a major stockmarket crash and economic meltdown = wipe-out for Storm clients.
For that, I don't think the bulk of the blame can be levelled at the banks.
If the pursuit of justice rather than money is really what motivates Storm clients to continue the fight, then I'd say you should have the principals of Storm Financial squarely in your sights, rather than the banks.

If the banks can be proven to have done anything illegal, then they should definitely be pursued for compensation. But the bulk of the blame clearly does not belong to the banks.
 
Better late then never I spose ! :eek:

Financial advisers to lose commissions
By Samantha Hawley

Updated Mon Apr 26, 2010 11:31am AEST


No more kickbacks: The Government says legislation cracking down on financial planners will make the industry more professional. (ABC News: Gary Rivett)

The Corporations Act will also be amended so financial advisers are required by law to put the interests of their clients first.

Financial Services Minister Chris Bowen says he is not attacking the financial services industry, he is just making it more professional.

"Thousands of Australians have their life savings wiped out by inappropriate financial advice," he said.

"They have a right to be angry and we have an obligation to act."

The announcement is the Government's response to a parliamentary inquiry into the financial products and services sector, which began after the collapse of Storm Financial and Opes Prime.

For the full story http://www.abc.net.au/news/stories/2010/04/26/2882479.htm
 
bunyip said:
Mindstorm


Anyone who knows investment and finance will be aware that poor risk management was the primary reason for the wipe-out of Stormers portfolios.
Risk management was the responsibility of Storm Financial first and foremost - you were paying them to manage your business, after all.
Secondly, risk management was the responsibility you, the owner of the business. Part of risk management involved, or at least should have involved, keeping a very close eye on your manager to make sure he was doing the job you were paying him for.



The problems of Storm clients began when their business manager, Storm Financial, allowed their business to be decimated once the global financial meltdown set in.
Storm could have taken action to protect their clients from catastrophic downside risk. For whatever reason, they failed to do so. Clients themselves also failed to do so.

Practically no risk management during a major stockmarket crash and economic meltdown = wipe-out for Storm clients.
For that, I don't think the bulk of the blame can be levelled at the banks.
If the pursuit of justice rather than money is really what motivates Storm clients to continue the fight, then I'd say you should have the principals of Storm Financial squarely in your sights, rather than the banks.

If the banks can be proven to have done anything illegal, then they should definitely be pursued for compensation. But the bulk of the blame clearly does not belong to the banks.
Click to expand...

Bunyip,

Not withstanding your comments regarding the loans issue which I agree with to some extent, I was of the opinion that clients thought there was a risk management strategy in place. That being, the provision of the margin call, which if activated properly and as the clients understood it would be, would have left them, battered, maybe decimated, but not in negative equity and unable to re-enter the market, let alone losing their homes. The issue of the margin call is at the centre of many victims "blame towards the banks", and in time will become the key issue in law suits against the CBA i'm sure.

I am not suggesting that storm could not have taken more action to protect their clients, however it does not appear (at this stage or to my knowledge) that storm actually acted illegally towards their clients in the final moments. Yes there are concerns with respect to loan documents early in the piece, I accept. However, it is the behaviour of the banks with respect to the margin call that many are concerned about. I draw your attention to the much publicised Sean Mccardle.

There is no doubt that one would expect the storm advisors to be tracking the investments. However one could also expect the CBA to act with similar diligence. Evidence presented has since shown that they had little capacity to deal with events as they unfolded. I would love to see the number of clients as a percentage of all who actually received a margin call at 90 % as instructed, as opposed to the 80 %, 127% and 142 odd % as has been claimed.

There are those who were able to make a margin call, if given the opportunity, yet they were not given the chance. For those the blame clearly, and fairly is directed towards those who made the margin call in the particularly haphazard, and possibly illegal way that it was made. This of course was CGI / CBA.
 
bunyip said:
With regard to margin calls, many Storm clients have stated that nobody told them they were in margin call.
The banks claim they told Storm when clients were in margin call, and that Storm failed to pass this information on to their clients.
A few months ago on this thread, someone posted a copy of a bank document on margin loans - as I recall, the document clearly stated that it was the clients responsibility to monitor their investments to ensure that they didn't go into margin call, and if they did go into margin call, to deposit funds into their accounts within a defined time to cover the margin call. Otherwise the bank would exercise its right to sell down the investment.

This appears to be what happened. Accounts went into margin call, margin calls were not met because clients were not told about them, and had not monitored their situations themselves to know when a margin call was imminent. So the banks sold down the investments to protect themselves from further downside risk.
Click to expand...

Bunyip,

I think this is where we differ in our understanding. As I understood it the agreement stated that the banks could and agreed they would make a margin call in the event the 90% LVR was hit. Once made the clients had five days to respond. There has been much argument as to whether the client or the planner should be contacted. As it stands the agreement stood that the client would be contacted. If I remember correctly the CBA was sure they had changed their policy away from to notification of the advisor but could not identify when this change was made and who was notified of the change. It has certainly not be documented in any agreements. Further, it was to be made at 90 percent, however it has been shown that there is much inconsistency as to what LVR clients were "called in, and in what time frame. This was the source of much interest in the inquiry where some clients where not notified by the banks for some 8 weeks. None (or maybe few) had the opportunity to meet the margin call.

There is also alot of debate as to the reliability of the data available to the clients (the website provided by CGI (CBA) )to actually monitor their investments. Again the CBA has alluded to their inability to provide reliable data for all of their clients in a carefully worded statement during the senate inquiry.

One thing the I do agree with is that "the banks sold down the investments to protect themselves". But this was not for fear of the potential losses at the hands of storm clients, but a need more generally by the CBA to liquidate and acquire cash very quickly during the GFC and possibly after a number of acquisitions....
 
Bunyip,
I agree with your comments in regards to people blaming the Banks for lending them the money in part. I am sure when the markets were going up, if a request for further increase in their loans was declined there would have been people complaining that by not lending them the money, the Bank's were costing them the opportunity to make further money by not giving them money to invest. This said, the CBA (I am not familiar with the other Bank's policy) continually changed their policy to make it easier to lend money out, not just to Storm clients but to all their clients in a bid to make their clients advocates of the CBA and thus improving the Banks customer service satisfaction. Whilst the VAS system has been used internally for a number of years, the Bank was able to control what decisions the system generated. The VAS system was used across all of Australia and it was not until the Bank realised that all staff in Australia were using the system in a way that they did not intend it to be used to generate valuations, that they made up policies that did not previously exist regarding the use of VAS. It would be interesting to know how many non storm clients there are out there that have Home Loans based on over inflated figures generated by VAS. So Bunyip, whilst I agree with you in regards to people complaining about the fact that they should not have been lent the money, it is evident that the Bank realises that their policies were too liberal and enabled loans to be approved that should not have been approved in the first place.
In regards to the Margin loans, I would have thought this was clear cut, everyone that I know who has margin loans knows that if a margin call is made and they do not act, the Bank will sell their shares. The argument that Storm clients should have been watching their portfolio or that Storm should have been is irrelevant, the Bank should have sold the shares automatically after no action was made after the initial call they made and not make some flippant comment about them changing the rules to relinquish their responsibilities.
There was a rumour that the CEO went on an overseas holiday in Dec 08 after the Bank spoke to EC and said that he wanted the whole thing cleaned up before he returned and made the call then to sell, and we all know what happened next.
 
From Firths, The Compensation Lawyers website.

"From what we have learnt by talking to people affected we believe that there are a number of similarities between the Goodridge case and the Storm Financial cases. Indeed the case for Storm clients may even be stronger....."


http://www.firths.com.au/site/storm.html


Can anybody add any further comment or opinion regarding the statements from Firths ?
 
I'm currently out with my Stormer mate. He's looking a bit despondent I don't think he's got much to sing about at the moment.

On another point has anybody heard from Big Max lately?
Has he cleared Cutoms yet?
 
I think the SICAG boys are busy organising the defence of all things Storm and Cassimatis in readiness for Slater & Gordon's pending legal action against the advisers. Many of these same advisers continue to provide advice in various businesses around the country.

SICAG have certainly helped all those victims of Storm in the fight against the lenders but not much said by them about Storm and its fellow travelers.

Apparently it's all about who has the deepest pockets, is it also because we wouldn't want friends, family and the funders of the first Townsville/Cairns roadshow put under any further scrutiny?
 
A Hidden Agenda said:
I think the SICAG boys are busy organising the defence of all things Storm and Cassimatis in readiness for Slater & Gordon's pending legal action against the advisers. Many of these same advisers continue to provide advice in various businesses around the country.

SICAG have certainly helped all those victims of Storm in the fight against the lenders but not much said by them about Storm and its fellow travelers.

Apparently it's all about who has the deepest pockets, is it also because we wouldn't want friends, family and the funders of the first Townsville/Cairns roadshow put under any further scrutiny?
Click to expand...

I think you've pretty well summed it up.
 
Solly said:
'Litigator examines joint action against CBA
New Storm case"

A Storm Financial litigator involved in a planned action against CBA expects to lodge proceedings this month.

More by Kate Kachor in Investor Daily here;

http://www.investordaily.com.au/cps/rde/xchg/id/style/9143.htm
Click to expand...

From this article..
"Levitt would not comment on the number of parties involved in joint venture discussions, nor would he confirm or deny one of the firms is Shine Lawyers (Shine), the firm linked to Erin Brockovich."

If this is proved correct, I wonder if Erin Brockovich will have any public profile in the case or proceedings.

http://www.shine.com.au/erin/
 
Pindibog said:
Its just like chinese whispers. So accurate....NOT
Click to expand...

Given your obvious intimate knowledge of the situation perhaps you could enlighten us as to the non-factual statements, because from where I stand two are factual (or at least been reported as so) and the other could only be known by the parties to the conversation so unless you are EC, a friend of EC, the journalist or spoke to the journalist then you wouldn't know.

Of course you may have spoken to EC and he said that he didn't, given he apparently didn't know he was the Managing Director of his own company you could drawn your own conclusion as to the veracity of that statement.
 
Pindibog said:
Its just like chinese whispers. So accurate....NOT
Click to expand...

Unfortunately, this is not just Chinese whispers, but from the mouth of Levitt himself - I hear well and don't need to get my ears cleaned.

I went to the Townsville meeting Levitt spoke at and took notes and he stated that the stormified would be expected to front up at least $5,000-$20,000 for his planned (though after more than a year not initiated) class action.

However, after criticising the CWB resolution scheme he asked those at the meeting to join up with his firm so that they could get the $5,000 for advising them on it.

When someone asked what class action experience his firm had - he stated none but that he could hire the best barristers to run a class action. I just hate to see the stormified throw away more money . . . .

Also from an April article in the Tville Bully:

"In an interesting development, Levitt Robinson is representing, as well as former clients, some of Storm's former leading players and financial advisers, such as its national business development manager Ron Jelich.

When it was put to Levitt principal Stewart Levitt this was a conflict of interest, he rejected the assertion, saying he would not represent anybody defending a claim.

He represented 'almost all' the former Storm employee representatives and that the logical path was to make peace with them and 'go after the people with the money'. . . .

It seems absurd that financial advisers who were telling clients to sell up to 100 per cent of their portfolios amid the crash, are now joining clients, many of whom agreed to the sell recommendations, to go the banks for selling them out without approval."

Here is a link for the entire story: :2twocents

http://www.townsvillebulletin.com.au/article/2010/04/07/128325_business_desk.html
 
"Angry Storm Financial victims put Prime Minister on notice"

"Storm Financial victims hope to gather thousands of signatures to pressure the Federal Government into paying compensation for their huge losses"

Read more on page 11 in The Courier Mail of May 13, 2010.
 

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