Storm Financial Group

[Garpal Gumnut]

Thank you Solly and Carey, and all other posters for keeping us up to speed with the latest reportings on Storm.

This is from the SMH's Stuart Washington, award winning financial journalist. It is a small extract from a much bigger piece which forensically examines the players and apportions potential blame for this tragic flat earth destruction of peoples lives and savings.

http://business.smh.com.au/business/are-banks-to-blame-for-the-storm-pain-20090619-cr5b.html?page=-1

How on earth did Julie and Emmanuel Cassimatis think they could rescue "Stormers"?On November 10 last year the ASX 200 was down 37 per cent for the year. For anyone with $1 million invested in the index with a $800,000 margin loan - or an 80 per cent "loan-to-value" ratio - this was bad news. The $200,000 in shares you thought you owned would have been wiped out, leaving you owing the bank $170,000.

Yet somehow Julie Cassimatis thought she could rescue clients facing these kinds of losses. In the letter obtained by the Herald, she told Taylor that Storm could "assist you until the markets recover by way of an advance each month".

Come again? In the face of one of the worst market downturns in history, Storm was going to support its clients and prevent the margin calls?

There is evidence Storm loaned $3.5 million to its clients as it tried to get them out of the margin loan death spiral. The Herald has spoken to one client who received a loan from Storm of $30,000.

Another investor and former Storm staffer, Luke Vogel, said he remembers his adviser, Andrew O'Brien, saying "not to worry about going into margin call because Storm would not allow it to happen because Storm had a central 'dam' of money".

But Storm's balance sheet was woefully inadequate to deal with this kind of strain. The unwillingness to accept the reality of the market collapse leads to strong evidence Storm believed it had engineered a protective relationship with the Commonwealth Bank and, to a lesser extent, Macquarie Investment Lending.

There was some kind of belief from the Cassimatises that if they could just get through the worst of it, everything would be all right.

gg

 

[chrisgee]

Thank you Solly and Carey, and all other posters for keeping us up to speed with the latest reportings on Storm.

This is from the SMH's Stuart Washington, award winning financial journalist. It is a small extract from a much bigger piece which forensically examines the players and apportions potential blame for this tragic flat earth destruction of peoples lives and savings.

http://business.smh.com.au/business/are-banks-to-blame-for-the-storm-pain-20090619-cr5b.html?page=-1



gg

thanks mr gg for highlighting this-i showed this story to the family and we all agree that this is very good summary of the debarcle-i know its goingv over old ground but how can banks be so naive about what was going on- i had a mate say to me investing in storm was no different to investing in any company that goes belly up- you take a punt but sometimes things turn to crap-but this is different everybody said taht they were ok-no bad press about them -heaps of people recommnding them-storm assured all that they had it all under control-smart computer systems etec etc ---
i really cant wait to see what the comm bank offer all- does anybody know what could happen after 31 august??

 

[Trevor_S]

WARNING: Don't go to this thread on another forum if you're a Storm investor looking for empathy or sympathy

http://forum.globalhousepricecrash.com/index.php?showtopic=51916

eg

If the market had kept going up all those Storm investors would be laughing on their round the world holiday trips. They were gamblers who deserved to pay the price. It was the Storm like investors, earning 45k a year but leveraging millions of dollars in investments, that caused the stock markets and property markets to inflate so high.

In order for markets to find an equilibrium people like that woman have to lose everything, and so they should.

 

[Julia]

Interesting, Trevor. Thanks. Demonstrates that ASF members were not unusually unkind in comments made.

 

[ngardiner]

Interesting, Trevor. Thanks. Demonstrates that ASF members were not unusually unkind in comments made.

GHPC are pretty well known for their particular brand of arrogance when it comes to others' misfortunes. They tend to pick on people who make investment decisions that they don't approve of.

Each to their own, I suppose. I personally don't care what car you drive, what suburb you live in or what you invest in but others seem to take delight in schadenfreude when it doesn't work out, regardless of the circumstances.

I wouldn't take anything to heart. All GHPC has is those who bother to take the bait by refuting their claims - you'll never win, it just goes in circles, it's a pointless endeavour.

 

[Solly]

"ASIC in hot seat over Storm and Opes Prime"

"Mr D'Aloisio and ASIC deputy chairman Jeremy Cooper will be the first to face the Parliamentary Joint Committee on Corporations and Financial Services inquiry into financial products and services in public hearings in Canberra starting on Wednesday."

More in The Australian by Blair Speedy here;

http://www.theaustralian.news.com.au/business/story/0,28124,25668039-36418,00.html

 

[Trevor_S]

but others seem to take delight in schadenfreude when it doesn't work out, regardless of the circumstances.

Really ? I don't get that at all from reading there. In fact the opposite, on the whole (generalisation here), they seem intent on trying to get housing viewed as a home rather then an over leveraged wealth destroying "investment", they want Government subsiding of the property market removed and tax payer money used more widely to increase genuine productivity (or returned to the tax payer), they want reform of the rental market to allow for increased labour mobility, reform of the tax base to tax consumption (not enterprise or income) , seem intent on exposing real estate and economic charlatans and pointing out some of the holes in arguments presented by some in the main stream media.

I guess as I support those sentiments, I read their forums occasionally. There are a few very smart individuals there, and it's much the same as any forum in terms of sorting the wheat from the chaff.

They can be brutal in their assessments though, I give you that and very quick to challenge concepts where inappropriate leverageing is used to artificially inflate wealth (most of the Australian residential property market for example). So if you're a sensitive sort, it may be best not to visit.

but I digress off topic

 

[-Bevo-]

Really ? I don't get that at all from reading there. In fact the opposite, on the whole (generalisation here), they seem intent on trying to get housing viewed as a home rather then an over leveraged wealth destroying "investment", they want Government subsiding of the property market removed and tax payer money used more widely to increase genuine productivity (or returned to the tax payer), they want reform of the rental market to allow for increased labour mobility, reform of the tax base to tax consumption (not enterprise or income) , seem intent on exposing real estate and economic charlatans and pointing out some of the holes in arguments presented by some in the main stream media.

I guess as I support those sentiments, I read their forums occasionally. There are a few very smart individuals there, and it's much the same as any forum in terms of sorting the wheat from the chaff.

They can be brutal in their assessments though, I give you that and very quick to challenge concepts where inappropriate leverageing is used to artificially inflate wealth (most of the Australian residential property market for example). So if you're a sensitive sort, it may be best not to visit.

but I digress off topic

Good post Trevor, I share same view about that site as you, while the mainstream might refer to them as doom and gloomers, in many cases they tell it like it is, I know I have a few friends up to there eyeballs and beyond in property / consumption debt who at some stage I believe will share similar fate to that of stormers.

 

[Solly]

Another two submissions of interest to the
Inquiry into Financial Products and Services in Australia.


http://www.aph.gov.au/senate/committee/corporations_ctte/fps/submissions/sub74.pdf


http://www.aph.gov.au/senate/committee/corporations_ctte/fps/submissions/sub79.pdf

 

[Solly]

"CBA's Storm announcement 'disappointing'"

"Australia's biggest lender will worsen the situation for investor clients of collapsed financial adviser Storm Financial, the government says.

Commonwealth Bank of Australia announced last week it would suspend all repayment obligations for loans taken out by Storm Financial customers until August 31."

More in the Brisbane Times from AAP here;

http://news.brisbanetimes.com.au/breaking-news-national/cbas-storm-announcement-disappointing-20090622-ctxk.html

 

[Solly]

"CBA gives Storm victims working 'holiday'"

"THE Commonwealth Bank has been castigated for continuing to charge interest on Storm Financial victims' loans after last week's offer of a loan repayment holiday.

Bernie Ripoll, the head of a parliamentary inquiry into Storm Financial's collapse, said yesterday he was "hugely disappointed" by the bank's position, which he said would leave clients worse off."


More from Stuart Washington in the Sydney Morning Herald is here;

http://business.smh.com.au/business/cba-gives-storm-victims-working-holiday-20090622-ctz5.html

 

[Quincy]

Why Storm failed its investors

BY Stuart Washington - June 23, 2009 - 12:35PM

Failed financial planning firm Storm Financial was within moments of being able to avoid a large amount of pain its customers experienced.

Uncovering why Storm Financial's founders, Emmanuel and Julie Cassimatis, never went down this path should be a central goal of the parliamentary inquiry, which starts public hearings tomorrow.

Why is this particular discovery so important? Like opening a series of Chinese boxes, addressing that question holds the answer to the burning question everyone wants to find out about.

And that question is: what was Storm's relationship with its lenders, particularly the Commonwealth Bank?

More here : - http://business.smh.com.au/business/why-storm-failed-its-investors-20090623-cur4.html

 

[bunyip]

GG

Congrats on starting this thread which looks to be one of the largest on ASF. I note it has a lot more hits than posts (trolls). Pity it is about such a horribly long train wreck.

There has been a lot of media attention on the banks of late as opposed to EC. This is because we the Australian public did not believe that our banks would be involved in such a fiasco as this. I must say I was impressed by Norris from the CBA coming out and taking control of the situation – admitting they had screwed up and saying they will make it right. This is what we expect from a chairman of such a public institution as the CBA. Yes the fact that a number of internal documents, which were quite damning, were about to hit the media may have prodded the CBA along but the reality is that they could have chosen to stay in the bunker and deny everything (like BOQ) – but they didn’t and this is a good thing for both the bank and the storm victims.

We expect better from our banks. Just go back through this forum and look at the many posts telling storm victims “the banks don’t make mistakes”, “they don’t write off loans”, “give up”, “the only winners will be the lawyers”, and the list goes on and on. Well folks banks do make mistakes - and you WERE WRONG!!!

Carey

Perhaps you shouldn't crow too loudly too soon. And perhaps you should refrain from using capital letters to make your point - I know that Joe, the owner and moderator of this forum, views the use of capital letters as akin to shouting. He considers it to be quite rude, and he takes a dim view of it.
You can always use the bold or the underline functions if you wish to emphasize a point.

You made yourself look foolish with your first post on this thread, by accusing us of being bank trolls and Storm plants if we were in any way critical of Storm clients. Further, you looked pretty silly by singing the praises of financial advisers, and suggesting that we'd have to be fools to manage our own investments, rather than use the services of an adviser.
You big-noted yourself by listing all your qualifications, and you suggested that we'd need years of experience across a broad spectrum of investments before we'd be competent to mange our own affairs.
All of which is, of course, absolute garbage.
You showed a lack of understanding of the fact that this forum is for discussion on a broad range of issues, rather than a support mechanism for Storm victims.
All in all you gave every indication of your disapproval of this thread.
Now you do an about face by congratulating GG for starting it!

On the issue of lawyers and banks, you should realise that the certain winners out of the Storm debacle will indeed be the law firms, just as some of us have been saying all along. They're the ones who are guaranteed to walk away from all this with a smile on their faces, win lose or draw.
Stormers getting compensation from the banks is by no means certain. So far the banks are giving no indication of that happening. Rather, they seem intent of taking measures that will bring them even more money from the Storm collapse.

I've said in more than one of my posts that I detest banks, and will be delighted if they're found to have done something wrong and are forced to pay compensation.
If that does in fact happen, then let's be grateful that justice has been served and the bully boy banks have been pulled into line. But let's not resort to childish point-scoring by people like yourself throwing off at anyone who expressed doubt that such an outcome would eventuate.
Similarly, if banks get out of this scot free, I hope the people who predicted that outcome will not be so childish as to score points by shouting 'See - I told you so!'
This thread is not about point-scoring and it's not about offering a support mechanism for damaged Stormers, as you originally suggested.
It's about sharing and discussing our views in a mature manner that befits grown men and women.

 

[Judd]

Stuart Washington's article in the SMH referred to by Quincy (Post 2033) raises a matter which no-one has explained to my satisfaction.

When I had a margin loan, it was directly with the lender. All correspondence was directly between myself and the finance provider. All buy/sell decisions were mine and once the trade was finalized T+3, the details would appear online within the margin loan. As an aside, while I never held unlisted managed funds under the margin loan some of my acquaintances did and they noticed that the unit prices for these were always by 3 or 4 days behind. Seems it was due to data feed by the fund mangers, not the margin lender. So possibly any brouhaha about delayed LVR advice based on unit pricing should be directed towards the fund manager and not the margin lender in these cases. I am assuming here that the Storm index funds were unlisted. Bit of a crock unlisted funds since listed index funds are way cheaper but then they don't pay trailing commissions to financial advisers.

Yet that does not appear to be the case in respect of Storm Financial clients. They were, apparently, required to give instructions to the financial provider who would then (supposedly) act on those instructions. So were these margin loans the type where the financial adviser acts as agent on behalf of the client and dealt directly with the financial provider? In other words, did Storm clients effectively provide a form of a power of attorney to Storm?

If that is the case, then some of the statements by CBA and other banks start to make sense in that the contact would probably require them to deal with Storm as the client and not the actual beneficiary. So when things were really going pear shaped, and the banks were not (as apparently claimed by them) receiving instructions from Storm Financial on what to do with accounts deep in margin loan, they took action to directly contact Storm client's. Way, way too late it would seem but it does start to make some sort of sense to me if my line of thought in paragraph 3 holds true.

I notice that the CEO of CBA has stated somewhere that while they will look at rectifying errors in respect of loans, the bank will not accept responsibility for the financial advice provided to Storm clients. Hmmm, maybe some houses could be safe but any funds lost due to the market kacking itself may not be.

 

[Pindibog]

"CBA gives Storm victims working 'holiday'"

"THE Commonwealth Bank has been castigated for continuing to charge interest on Storm Financial victims' loans after last week's offer of a loan repayment holiday.

Bernie Ripoll, the head of a parliamentary inquiry into Storm Financial's collapse, said yesterday he was "hugely disappointed" by the bank's position, which he said would leave clients worse off."


More from Stuart Washington in the Sydney Morning Herald is here;

http://business.smh.com.au/business/cba-gives-storm-victims-working-holiday-20090622-ctz5.html

Lets get it right from CBA hardship team mouth. They are just adding the interest up for the 3 mths but to make things worse they are going to charge you interest on the 3mths interest you have deferred!!! Show where that helps anyone but CBA? Again they have increased their cashcow abilities on the unsuspecting. When I asked for the loan repayments to be stopped NONE of this was explained to me. They said yes the loan repayments have been stopped unitl 31/8. I only found out through the ministers office that the interest was accruing and being charged interest on that. I rang CBA and they confirmed. How ridiculous is that!! Misleading again. You read the Hansard report from Wed.17th and even the ministers thought the CBA had stopped repayment of loans and interest.

 

[awg]

I asked about this in the first few pages of this thread, but got no answer.

Where are the risk assesments carried out for each client when they first invested?

I still have my old one thru Commonwealth Premium.

It consists of a multiple choice test and various small tables, identifying risk profile and asset allocation.

They MUST be completed by all reputable financial planners

So how is it possible that people where put into super aggressive options, that did not qualify.

It is almost impossible for a retiree to qualify for aggressive option!

did they get done??

whats the story???

 

[Trevor_S]

Show where that helps anyone but CBA?

Shareholders ! You know, those 1000's of retirees and scrip owners, in the former case relying on the income stream from dividends to live on and in the later case, paying them an income ? For without that income, those groups couldn't pay tax and support the massive welfare budget.

Superannuants ! You know that massive group of people relying on the Super for future retirement plans that often old scrip in the bank

Employees: You know, that group of many 1000 that rely on a profitable bank for a job

Australian Public: You know, the big profits made are taxed at 30%, that goes to Government to implement their (often hairbrained) schemes.

That enough people ?

Yes it sucks for Storm "investors".

 

[Farencue]

There seem to be some who were "stormified" posting on this thread who continue to choose to not to learn from their mistakes but expect everyone else to bail them out.

Incidentally Pindibog, repayments suspended by the CBA means exactly that. Repayments suspended.
Of course the interest continuing to be charged does not seem fair to the "victims" at this stage but I would think people who consider themselves as "investors" can at least read and comprehend plain English.
I sincerely hope you have an accountant and not some other financial planner helping you out of the mess you created for yourself.

And again, the lack of any noise by those posting here, especially the "advisors", seems very very suspicious to me.
I ask again of those who consider themselves innocent victims: why has nobody said a peep about EC and JC who have scammed you blind?
All well and good to blame the banks and I am glad that the banks shoddy loan checksheet has been exposed, but the banks did not scam you outright, the people to who you signed an authority to act on your behalf did.
So why are you not seeking recourse from them?

 

[pilots]

There seem to be some who were "stormified" posting on this thread who continue to choose to not to learn from their mistakes but expect everyone else to bail them out.

Incidentally Pindibog, repayments suspended by the CBA means exactly that. Repayments suspended.
Of course the interest continuing to be charged does not seem fair to the "victims" at this stage but I would think people who consider themselves as "investors" can at least read and comprehend plain English.
I sincerely hope you have an accountant and not some other financial planner helping you out of the mess you created for yourself.

And again, the lack of any noise by those posting here, especially the "advisors", seems very very suspicious to me.
I ask again of those who consider themselves innocent victims: why has nobody said a peep about EC and JC who have scammed you blind?
All well and good to blame the banks and I am glad that the banks shoddy loan checksheet has been exposed, but the banks did not scam you outright, the people to who you signed an authority to act on your behalf did.
So why are you not seeking recourse from them?

Because they will have all the money they have SCAMMED off the wood ducks hidden away and will be untouchable.

 

[Farencue]

Thanks for the heads up pilots but I was thinking some might want blood at least.

Anyway, after having a quick dig around, and I dont think Solly has posted it
before, here is an excerpt from an article titled "Storm Chasers" at www.professionalplanners.com.au
The O'Brien referred to is Noel O'Brien, co chairman of SICAG. The bolding is mine.

"O’Brien is angry about the portrayal of Storm clients by some commentators as greedy and naïve. “All of this hullabaloo about margin lending and that we should have known better… the basis of the exposure was always that history has shown that when we have a fall in the market it will recover,” he says.

“Our buffers were sufficient to see us through that. We’re getting a lot of comment from people in hindsight saying, ‘You should have seen this’. That’s pretty amazing because no one else in the world saw it. We could sleep at night because we had these buffers built in that allowed for downturns in the market.”

He insists none of the members of SICAG are “high flyers”, despite the overseas trips that Storm arranged and some clients enjoyed, which Professional Planner understands cost $25,000 per head.

“I live a modest life, my wife and I had a modest income and we were really proud that we could call ourselves self-funded retirees, therefore avoiding becoming a burden on the taxpayers,” O’Brien says. “We were comfortable in our strategy.”O’Brien is adamant that the actions of CBA, and Colonial Margin Lending, engineered the collapse of Storm and vows to fight to protect the assets of all creditors.

“[If it wasn’t for the banks] we would still be in the game, we would all still have our houses,” he says. “We would still be scared to death about what’s happening worldwide, because it’s never happened before; it’s unprecedented and has been created by the banks which have rorted their systems, but we’d still be in there fighting. Our aim is to get total restitution; our aim is to get people’s houses back and get them back in the game.”

Perhaps that is the answer to my question: the members of SICAG believe that the banks took them out of "the game".
Of course EC and JC and the rest of the crew wouldnt have taken the stormified out of the game, they were too busy with their heads in the sand taking fees and commissions.

As I have said before, the naive "investors" were never going to be winners in what Mr O'Brien considered a game. It was always EC's game along with all of his salesmen who have been astonishingly silent.