Storm Financial Group

[Solly]

I am not one for reading legal documents although minimegumnutkid6 is a lawyer and has promised to peruse it for me.



This post Solly may be the most significant since I first started this thread.

If it is true and the Cassimatises are charged and convicted it will have five consequences.

1. An out for the banks

2. Some closure for the victims of the Storm "model".

3. The end of the amateurish perambulations of SICAG.

4. Justification for Damo Scattini's approach.

5. Some time inside for those convicted.

gg

gg, it will be interesting to see if there is any action with regard to Chapter 7 of the Corporations Act, especially in relation to Sections 945A, 945B, 952D, 952E, 952F, 952G & 1041E.

 

[specialed]

Macca

If they'd all tried to convert to cash at the same time when the market was in free fall, then yes, the banks may have struggled to cope with the workload.

Bunyip,

Interesting that you should mention converting to cash.....there is a more to play out with respect to this and the CBA.....stay tuned....

 

[bunyip]

They could be greedy, they could be naive but the price they paid for it is too high and I think they need a bit of support from the government to get them back on their track...

Could you clarify what you mean by 'a bit of support from the government'?

 

[Julia]

Could you clarify what you mean by 'a bit of support from the government'?

I, too, would like to know what you have in mind here, ROE.
Let's remember the taxpayer has already copped a large bill for the enquiry, payment to Worrells, etc. Then there is the time still being taken up by ASIC which is hardly likely to be costing $10 per hour.

 

[specialed]

Macca


Once your investment has fallen far enough to trigger a margin call, you've already lost most of your money.

Bunyip,

Isnt this only the case if the market NEVER recovers, which of course it does and has...Meeting the margin call and any other subsequent ones actually preserves your interest which then recovers as the market does. There are many storm investors who could have met a margin call, or I believe the three they would have needed to. They would now be sitting on an investment worth more than when the market crashed. Hence the fact that the Margin call is at the centre of this mess for many.

It is simply not true, to state that once a margin call is triggered you have lost your money. Please correct me if my understanding of this is incorrect..

 

[Ferret]

Specialed,

Please correct me if my understanding is incorrect, but I believe the plug was pulled in November 08 and the market kept falling until March 09.

If any stormer had acted on a margin call they would have lost more money over the next 4 months and been in an even deeper hole in March. Why are they complaining that they were saved from this?

 

[Solly]

I know some Stormers are eager for some better news and a possibility of a bit more hope this afternoon.

I wish you good luck, if possible let us know how it all goes.

 

[specialed]

Specialed,

Please correct me if my understanding is incorrect, but I believe the plug was pulled in November 08 and the market kept falling until March 09.

If any stormer had acted on a margin call they would have lost more money over the next 4 months and been in an even deeper hole in March. Why are they complaining that they were saved from this?

The complaint is that they were not saved from anythng, they were prevented from staying in the Market, and YES meeting subsequent margin calls if required.

All those who had been given the opportunity, and met the margin calls, would now be sitting on a much larger portfolio. It is only for the bank to decide AFTER the five days if the investor is unable to meet their obligation.

It is only speculation whether or not investors could meet the call. A court in deciding the legality of this should have no interest in whether a client was able to meet the call, just whether the term of the contract was met. Which , in this case , the claim is that this obligation to present the client with, and allow the client to meet the margin call was not made.......

 

[bunyip]

Bunyip,

Isnt this only the case if the market NEVER recovers, which of course it does and has...Meeting the margin call and any other subsequent ones actually preserves your interest which then recovers as the market does. There are many storm investors who could have met a margin call, or I believe the three they would have needed to. They would now be sitting on an investment worth more than when the market crashed. Hence the fact that the Margin call is at the centre of this mess for many.

It is simply not true, to state that once a margin call is triggered you have lost your money. Please correct me if my understanding of this is incorrect..

I should have been clearer in my meaning - what I mean is that the value of your investment has already been decimated by the time you reach margin call.
Sure - if you have the financial means to keep meeting margin calls indefinitely until the market recovers, then in theory you could ride the market back up again.
The problem with meeting margin calls is that it takes a serious bear market to trigger them, and they're triggered at a point that's unlikely to be the bottom of the market.
This is the scenario that unfolded in the 2008 slump - after Stormers accounts went into margin call en masse, the market fell for another five months, and quite a bit further in percentage terms.
Stormers who had the capacity to meet margin calls would be in the minority. Not only that, but chances are that they would have been required to meet further margin calls when the market kept heading south.
If you were an investor in the US market in the 1929 crash, you would have had a lot of margin calls to meet and you would have been waiting 25 years for the market to recover. The same thing could have happened here.

Margin loans are unsuited to longer term 'buy and hold' stockmarket investors - there are other types of loan products more suited to long term strategies.

It should be a simple matter to clear up who was responsible for letting Storm clients know when they reached margin call. Stormers would have received a copy of the loan terms and conditions when they took out their loans.
Would some of the Stormers who have been following this thread, please clarify this matter for us by looking at your loan terms and conditions, and telling us what they say.

specialed, assuming that Storm investors had been able to hang in there, how would they now be sitting on an investment worth more than when the market crashed?
The market hasn't yet recovered its losses, has it?

 

[Julia]

It should be a simple matter to clear up who was responsible for letting Storm clients know when they reached margin call. Stormers would have received a copy of the loan terms and conditions when they took out their loans.
Would some of the Stormers who have been following this thread, please clarify this matter for us by looking at your loan terms and conditions, and telling us what they say.

Bunyip, I have repeatedly made this request with no response.
It's difficult not to reach the conclusion, therefore, that Storm investors failed to ensure they had all the terms and conditions in writing.
It would seem pretty simple for someone to quote, e.g.

Margin Calls: The responsibility for the client being advised of a margin call lies with CBA. Such margin call will be made at 90% LVR.

specialed, assuming that Storm investors had been able to hang in there, how would they now be sitting on an investment worth more than when the market crashed?
The market hasn't yet recovered its losses, has it?

Agree. There are some very optimistic and utopian assumptions being made about the position Stormers would have been in had they repeatedly met the margin calls during several months of falling values.

And we don't know, of course, but I've had the impression that Stormers put all they had into the Storm high leverage model, rather than leaving tens of thousands lying around in cash, ready to meet the margin calls.

 

[Mash]

Julia and Bunyip
I am sure you have been told this answer many times ...... Our original margin loan docs signed in 2002 States:
2.MARGIN CALLS ( I'm not shouting that's how it is typed in the contract)
If the margin loan equals or exceeds a certain percentage of the overall security value (see page 7) you will receive a margin call. You cannot just wait out any downturns in the market. You will have limited time to deal with any margin call, by either repaying to us enough of your facility or giving us more securities on our list. If you fail to act within the time periods specified in the terms and conditions then some of your securities may be sold so as to reduce the amount owing to an amount that does not exceed the base security value..


Note it does not say we will contact your financial planner it says "you" and that is the crux of the whole matter... I was not given a margin call.... they have not met the conditions of their contract... I did not get a margin call...... I don't know how that can be made any clearer to you all. They have failed to uphold their legal responsiblilty to issue a Margin Call to me!!!!!Everything else hinges on that fact.... simple contract law.....
Note: it also says "some of your securities MAY be sold" not WILL be sold without your knowledge!

I also believe the lawfulness of the scheme which was allegedly operated by CBA with Storm is the basis of the lawsuit which is ready to be filed by Levitts.

 

[Solly]

"Class action pending in Storm loans fiasco"

"SYDNEY law firm Levitt Robinson says it is ready to launch a class action against the Commonwealth Bank on behalf of ''hundreds'' of victims of failed investment company Storm Financial."

More by Tony Raggatt in the Townsville Bulletin here;

http://www.townsvillebulletin.com.au/article/2010/05/29/142401_news.html

 

[Solly]

I also believe the lawfulness of the scheme which was allegedly operated by CBA with Storm is the basis of the lawsuit which is ready to be filed by Levitts.

Mash, I find this statement to be of notable significance.

I will be eagerly following progress of this case.

 

[Solly]

I know some Stormers are eager for some better news and a possibility of a bit more hope this afternoon.

I wish you good luck, if possible let us know how it all goes.

Anybody able to shed any further light on the Levitt's meeting at Redcliffe today?

I'm sure there are many interested participants eagerly awaiting on any feedback...

 

[Julia]

Julia and Bunyip
I am sure you have been told this answer many times ...... Our original margin loan docs signed in 2002 States:
2.MARGIN CALLS ( I'm not shouting that's how it is typed in the contract)
If the margin loan equals or exceeds a certain percentage of the overall security value (see page 7) you will receive a margin call. You cannot just wait out any downturns in the market. You will have limited time to deal with any margin call, by either repaying to us enough of your facility or giving us more securities on our list. If you fail to act within the time periods specified in the terms and conditions then some of your securities may be sold so as to reduce the amount owing to an amount that does not exceed the base security value..

Thank you, Mash. I don't believe you or anyone else has previously posted such a direct quote before. If I'm wrong, perhaps you could direct me to the appropriate previous post.

Note it does not say we will contact your financial planner it says "you" and that is the crux of the whole matter... I was not given a margin call.... they have not met the conditions of their contract... I did not get a margin call...... I don't know how that can be made any clearer to you all.

It is indeed clear. It was that wording Bunyip and I were looking for and which as far as I'm aware has not been posted before.

They have failed to uphold their legal responsiblilty to issue a Margin Call to me!!!!!Everything else hinges on that fact.... simple contract law.....
Note: it also says "some of your securities MAY be sold" not WILL be sold without your knowledge!

Why then has there been all this long period of confusion about whether it was the CBA or Storm who were responsible for the margin calls?
Are CBA alleging the responsibility was transferred to Storm at some stage?

 

[Solly]

Where it all was told. A very interesting read.

 

[Mash]

Julia
There has only ever been confusion because that is how CBA has orchestrated it!

 

[Mash]

Anybody able to shed any further light on the Levitt's meeting at Redcliffe today?

I'm sure there are many interested participants eagerly awaiting on any feedback...

Levitts meeting was about the action to be launched this week.... however Ralphy and his co horts requested a meeting with Levitt to try and head it off.... like I have said before... Ralphy doesn't want to share a cell with Manny.... Suddenly there has been a powershift me thinks !!
No cap in hand resolution scheme this time!!! Enough evidence has been gathered to make Ralphy very uncomfortable....

BTW Solly in answer to a previous question... I have ASIC on speed dial

 

[GumbyLearner]

Levitts meeting was about the action to be launched this week.... however Ralphy and his co horts requested a meeting with Levitt to try and head it off.... like I have said before... Ralphy doesn't want to share a cell with Manny.... Suddenly there has been a powershift me thinks !!
No cap in hand resolution scheme this time!!! Enough evidence has been gathered to make Ralphy very uncomfortable....

BTW Solly in answer to a previous question... I have ASIC on speed dial

Manny vs The Guillontine

Poor Many. Innocent soul. Should have never been subject to public decapitation laws in the first place!! It only encourages strict enforcement regimes!

 

[Solly]

Levitts meeting was about the action to be launched this week.... however Ralphy and his co horts requested a meeting with Levitt to try and head it off.... like I have said before... Ralphy doesn't want to share a cell with Manny.... Suddenly there has been a powershift me thinks !!
No cap in hand resolution scheme this time!!! Enough evidence has been gathered to make Ralphy very uncomfortable....

BTW Solly in answer to a previous question... I have ASIC on speed dial

Mash this now appears to be gaining a new momentum.

• A new legal approach and treatment
• New actions in the wind
• Evidence given to ASIC which could be detrimental to one the Four Pillars
• And a Bank willing to talk

I wonder if GG should check to see if there are any spare beds at "The Creek"?