Storm Financial Group

[stung]

Fair dinkum.

I've heard everything now.

This is a crazy parade.

Is he really the father of a Storm Adviser.

Perhaps this should be disclosed on the SICAG site.

gg

I made mention of this on pg 34 (post 672). I thought this was significant information but no one responded so I left it alone.

I do note, however, back then it appears I was only game to say that I was 90% sure. It also seems I wasn't game to name anyone.

The reason I did not join SICAG is because Noel O'Brien is a founder. Having said that I do believe that they have done some great work dealing with the banks, and this in turn has helped me. I just wish they would admit that it was Storm that played the major role in the debarcle.

 

[Quincy]

Article in the Financial Review by Patrick Durkin - 22 June, 2009.


"REGULATOR'S ADVICE: INVEST BETWEEN THE FLAGS"

The Australian Securities and Investments Commission is to launch a big awareness campaign targeting retail investors, amid fears that the disclosure-based regime has failed them.

The move comes after collapses that have wiped more than $73 billion from their savings.


More here : View attachment AFR - 22.06.2009.pdf

 

[awg]

So no risk management at all from anyone.

So the investors who put their home on the line, what they did is say

"bet the house on red"...and lost

The advisors who permitted this, after 4 years of high market returns should be in jail, I have absolutely no qualms about that. Criminal Incompetence.

No wonder commssion Fin planning now to be finished up

Absolute greed by the planners

Manny should be in the can, but the guy seems very cunning, wouldnt surprise me if he has his ar$e legally covered.

The mathematics and logic are terribly simple.

If you dont understand how an Investment works (Margin loan) dont invest in it...you MUST know EXACTLY what your margin is, and know what you will do when if it is hit ie ( close out your position within 24 hrs!)

for Ralphie babie to admit, he must be as shocked as me laxity of CBA risk management in relation to this.

1987 shows a recent example of what can happen to heavily margined equity holders, which is still well within the memory of most people involved in this debacle

 

[donteventryit]

http://www.businessspectator.com.au/bs.nsf/fmISBlogHome?OpenForm&src=blb&is=Non-Industry&blog=Aurelia%20the%20Wise

This all sounds a little too familiar ...

Posted 24 Jun 2009 7:40 AM
It's all relative
Dear Aurelia

I'm a financial advisor, which doesn't make me the most popular kid on the block at the moment. But that's not my main problem. My big problem is that one of my biggest clients has lost three-quarters of her net worth due to my recommendations, and she happens to be my sister-in-law. This is causing a lot of tension in the family, as you can imagine, including some very heavy pressure from the head of our family, who expects me to pay her back the losses. My response to them all is caveat emptor, but they don't understand Latin.

Robert J, Brisbane

Dear Robert

What's the old story about not doing business with children, animals or family? If we are keeping with matters latin, I was glad to see you used a small cap in describing your family. While you don't say it I am guessing that you probably over-fertilised your own positions so you have had similar losses or at least I hope so. It's your only defence. If you happened to get out of the market in one piece and didn't share the intel with the family and all your other clients you are probably in an extraordinarily painful position. Any thoughts of living in a boatshed somewhere down the south coast while they cool off?​

 

[Judd]

....If you dont understand how an Investment works (Margin loan) dont invest in it...you MUST know EXACTLY what your margin is, and know what you will do when if it is hit ie ( close out your position within 24 hrs!).....

If there is one thing that I am starting to find annoying it is reading submissions in which the author is complaining about high LVR's being the problem.

It wasn't the LVR (Loan to Valuation Ratio) which was the problem. It was the gearing involved.

So to set things straight for those "Stormers" who may occasionally read [this forum,] and do not understand the difference, gearing is the loan divided by the asset value which is then expressed as a percentage.

Thus 60000 (loan)/300000 (Asset Value) equals 20% (gearing).

Onto LVR which is the ratio expressed as a percentage that the margin lender will use to determine how much to lend against a particular product. It is also used plus the buffer to determine when a margin call will be triggered.

Hence, Market Value of Asset 300,000, LVR 75%, Lending Value 300000*75% equals 225000. Buffer at 10% of Lending Value equals 22500. Lending Value plus Buffer 247500. Subtract amount of Loan (60000) equals 187500 or 62.5% of the Market Value. That means, in this example, the Market Value would need to fall by 62.5% before a margin call would be made.

For "Stormers", the gearing killed you. Pure and simple excessive gearing.

By the way, those calculations took me less than 5 minutes and its primary school maths done by hand on the back of an envelope. Understanding the basics of a margin loan was explained to me when I applied for one.

So to educated people, including retired teachers, who made submissions to the inquiry you could ask yourselves whether you have been a tad lazy in the application of your past training and work.

Love and kisses, I'm off to earn a living.

 

[asproboy]

I'm sure Manny, Mr Jelich and others are feeling better today knowing that they're not living in Germany:
http://www.smh.com.au/world/zimmer-frame-gang-tortures-adviser-who-lost-20090624-cw44.html

 

[Solly]

"CBA, Storm victims wind up negotiations"


"Three days of intensive talks between Commonwealth Bank of Australia and a representative of former investor clients of collapsed Storm Financial concluded yesterday amid hopes of a settlement."

See the full story by Duncan Hughes in the Australian Financial Review.......

 

[Farencue]

Like Mr gg, Ive always thought that SICAG mob were very suss in their emotionally laden language with no hard facts or anything to say about the Storm advisers. How very very interesting that Mr O'Briens son was/is a Storm adviser.

Doesnt really give them much credibility in my opinion, although I do appreciate that a poster here says they were helped by SICAG.

I was beginning to think that the reason nobody was blaming Storm was because the punters were friends and family of the scamming advisers. I cant think why someone would scam their own family and so it leads me back to the thought that pure greed drove the majority of these people. Some of the submissions to the parliamentary enquiry are nothing but sob stories highlighting their naiveity.

Yes, Storm certainly have a lot to answer for, wonder if anything will be forthcoming?

 

[Farencue]

Interesting too Judd that you are saying that it was the gearing that was the problem not the LVR.

Here is an excerpt from Ron Jelich's submission to the Parliamentary Joint Committee:

"The favourable treatment of one of my clients, Andrew Symonds, is a
good example of the intimate relationship that existed between
Storm and the CBA. I recall that my associate Andrew O’Brien was
doing a refinance of Andrew Symonds’s property from Suncorp to
CBA.
The conventional lending requirement against residential property is
an 80% LVR. When Amanda Holmes from CBA Townsville heard that
it was Andrew Symonds she indicated that she would lend Andrew
90% LVR rather than the 80%.
Andrew O’Brien, my associate, suggested that if he obtained a signed
cricket bat from Andrew Symonds, would CBA waive the mortgage
insurance? This was agreed to and the loan went through at a 90%
LVR with complimentary mortgage insurance.
My understanding is that Andrew Symonds did not know about this
arrangement. Andrew O’Brien did however organize for him to sign
the cricket bat and it was provided to the representatives from CBA.
Andrew Symonds subsequently invested that money and also monies
from a margin loan through Colonial."

What a web that has been woven, fancy Andrew O'Brien being an "associate" of Mr Jelich. No wonder nobody has anything bad to say about Storm, old boys club perhaps?

I find it rather strange Mr Jelich thinks there is anything unusual about a 90% LVR and that Amanda from the CBA only lent 90% because it was Andrew Symonds. What a load of horsecrap Mr Jelich.Westpac lent me 90% no problems (nothing to do with Storm) all I had to do was take out mortgage insurance. So what if CBA waived it? Also why did Andrew O'Brien offer the signed bat when Andrew Symonds knew nothing about it (according to Mr Jelich).

I do feel some sympathy for people like chrisgee who obviously have no clue about investing (all they want is their house and money back like they had before ) and I hope those people can learn some lessons about being scammed - as I did once upon a time.

People like Ron Jelich and the O'Briens and the rest of their ilk? Just cant think of the appropriate words at the moment. Ah thats it - scumbags.

 

[bunyip]

Noel O'Brien is the father of Andrew O'Brien (a former Storm financial advisor). He is very unlikely to lay blame at the feet of Storm or their salesmen.

In my case, all the banks did wrong was loan me too much money and in combination with Storm were a bit creative with the figures to have the loan approved. It was Storm who kept ignoring our requests to sell out while we still had a fighting chance.
Instead they left it too late so that our remaining funds had to be used to service the margin loan, leaving zilch to use to put back into a rising market.

I lay blame with EC for being a crook, his salespeople for decieving their clients, the banks for reckless lending and myself for falling for it all.

Stung

I give you the highest praise for your candid and realistic appraisal of the Storm debacle.
You balanced viewpoint and above all, your honesty in accepting part of the blame yourself, are a nice change after all the rot we've been hearing from SCIAG about how it was all the fault of the banks.

I commend you for having the character to come out and tell the true story.

Stormers would be doing themselves a huge favour if they faced up to the truth as squarely as you've done.

All the best to you.

 

[Quincy]

. . . . Here is an excerpt from Ron Jelich's submission to the Parliamentary Joint Committee:

"The favourable treatment of one of my clients, Andrew Symonds, is a
good example of the intimate relationship that existed between
Storm and the CBA. I recall that my associate Andrew O’Brien was
doing a refinance of Andrew Symonds’s property from Suncorp to
CBA.
The conventional lending requirement against residential property is
an 80% LVR. When Amanda Holmes from CBA Townsville heard that
it was Andrew Symonds she indicated that she would lend Andrew
90% LVR rather than the 80%.
Andrew O’Brien, my associate, suggested that if he obtained a signed
cricket bat from Andrew Symonds, would CBA waive the mortgage
insurance? This was agreed to and the loan went through at a 90%
LVR with complimentary mortgage insurance.
My understanding is that Andrew Symonds did not know about this
arrangement. Andrew O’Brien did however organize for him to sign
the cricket bat and it was provided to the representatives from CBA.
Andrew Symonds subsequently invested that money and also monies
from a margin loan through Colonial."

I wonder if Ron Jelich obtained Andrew Symonds' ("one of my clients") authority to divulge details about Mr. Symonds' personal dealings with Jelich and Storm and the CBA etc. in his submission ?

 

[Onlooker]

Of course, if all those "Stormers" had known something about Greek syntax, they would have known where they would finish up, to wit:

"Greek Syntax
The Restrictive Use of the Attribute Adjective: For example John 10:11 Jesus says, "I am the good shepherd". In Greek, the word order is "I am the shepherd the good", that is 'article', 'noun', 'article', 'adjective'. This is the second way the attributive adjective can be formed. The noun 'shepherd' is being modified by the adjective 'good'. Notice that 'good' still comes after the second definite article which modifies this noun. This position helps to emphasis the quality of "good" as if to say that not all shepherds are good. It could be translated, "I am the shepherd, that is, the good one (as opposed to the others who are not good)".

Therefore, "Storm Financial" is just the Greek way of writing "Financial Storm."

 

[Trevor_S]

Because they will have all the money they have SCAMMED off the wood ducks hidden away

No there isn't, there is not money. It's not as though it;s all tucked away in an account earning 6%, rubbing their hands together like Dr Evil and cackling. It's GONE. To get any back, you have to take it from someone else.

That aside, maybe Storm "victims/investors whatever they call them selves can adopt the German philosophy.

http://www.smh.com.au/world/zimmer-frame-gang-tortures-adviser-who-lost-4-million-20090624-cw44.html

 

[Onlooker]

I wish to post a few links but can't do so until I have posted at least 5 submissions, so here goes number 2

 

[Onlooker]

... and number 3

 

[Onlooker]

and number 4 (almost there!)

 

[Onlooker]

... finally, number 5! (maybe Storm Financial clients ought to have a bit of a delayed-action bar in their investments, too

 

[Onlooker]

Watch http://www.youtube.com/watch?v=4KLUKsI-4Xs and http://www.youtube.com/watch?v=1T1fscqdPWo&feature=related (copy and paste URL into your browser)

Emotional reportage but not hard-hitting enough!

So how did that desparate sailing-couple, Vivienne and Maurice, shown at the beginning and end of those video clips, finish up with nothing except a huge mortgage on their house? Here's an example of how it might have happened which assumed a relatively 'safe' 75% lending margin (some Banks lent as high as 100%!) and completely ignored very heavy bank and interest charges - not to mention the upfront 7% and ongoing 1% commission to our friends Emmanuel and Julie:

1) They borrowed 75% against their $1 million house

2) They invested the borrowed $750,000 in shares

3) They borrowed another 75% against the first lot of shares to buy another $562,500 worth.

4) This could have gone on several more times like the veritable financial perpetuum mobile it seemed to be but let's assume they came to their senses and stopped there. They now held shares totalling $1,312,500 and had loans totalling $1,312,500

5) Then the 'unthinkable' happened: the sharemarket dropped 50% and the value of the shares was reduced to $656,250. The lenders called for top-up money to restore the 75%/25% margin failing which they sold all shares at $656,250 (perhaps even lower!) which left a shortfall of $656,250 against the loans. All shares were gone and the 'gambler' - sorry, investor - was left with a debt of $656,250 against the house which would also need to be sold to repay the balance of the loan.

Push up the gearing to 85, 95, even 100%, continue the "buy, borrow, then buy again" routine a few more times, allow for an even steeper drop in share values (some of Australia's most conservative company shares had dropped to as little as one-third of their former value at the climax of the shake-out), and it's easy to see how that housewife fighting back her tears could have finished up with nothing except two margin loans totalling 2.5 million dollars! Or the 73-year old granny who finished up with a 1.18 million margin loan and a $256,000-debt on her house! Welcome to the real world of high-stakes finances!

Did our friend Emmanuel explain this possibility to his clients? He seemed to have laughed those loans off as a Claytons loan - "the loan you have when you are not having a loan." Of course, every 100%-geared up client meant a doubling of Storm Financial's fees!

Some of those investors didn't look sophisticated enough to withdraw money from an ATM, let alone buy and sell shares. Who did it for them? And who told them what to buy and what to sell? Given the number of clients, Storm Financial could have been in no position to individually monitor and manage those portfolios. Did they use a cookie-cutter routine of 'get-set-and-forget' with the same shares for all their clients? A highly dangerous strategy even with a paid-up portfolio which allows one to sit it out when things go bad; totally suicidal with a highly-geared portfolio when each market downturn could mean a margin-call and a potential sell-off! What analysis, if any, was good old Emmanuel referring to when he said, "In the analysis we did, we did not believe the house was at risk"? What professional expertise did this former insurance salesman possess that made him think he could bet his clients' money (and worse, his clients' BORROWED money!) on his aberrant model of an ever-rising market? Even at the absolute nadir of the collapsing market in October 2008, when the index had almost halved from where it had been just five months earlier, and when Storm Financial were finally forced to send out this letter http://www.theage.com.au/ed_docs/Letter.PDF, urging clients to convert what was left of their portfolios into cash, they advocated that clients should NOT use the cash to repay their 8%-interest margin loans, but to keep it on deposit at 4% "so that the cash can be switched back into equities to gain from any upswing in the future." Many people instructed Storm Financial to switch to cash. Had Storm Financial acted on those instructions, a lot of pain could have been avoided. But here's the kicker: not one of those instructions was acted on ... read more at http://business.smh.com.au/business/why-storm-failed-its-investors-20090623-cur4.html

There are many questions: such as who declared on the bank's loan application form that the unemployed widow shown in the video clip, who finished up with a $300,000-debt, had a MONTHLY after-tax income of $104,000 ? And what was the 'sales pitch' employed by those dozens, if not hundreds, of Storm Financial's 'investment consultants'? What presentations and promises did they make to their would-be investors?

Those people must have had some idea of how dangerous a game it was they were playing. I mean, our 'yachtie' Maurice, who wondered aloud on-camera how the banks could have lent him $2 million, didn't look like someone who'd spent his life selling shoelaces door-to-door. He must've realised how dangerously deep he was into this high-stake poker-game! Was it greed that conquered all their fears, that stopped them from asking some searching questions? Every suburban accountant or solicitor could have told them of the dangers!

Of course, had things gone their way, had the market gone UP by 50% to give them a PROFIT of $656,250 - and all on borrowed money! -, they would no doubt have rubbed their hands with glee and regarded the rest of us, who conducted their financial affairs with a little more caution, as complete simpletons. However, now that the party is over for them, they're desperately trying to portrait themselves as innocents who have been had. As my Canadian friend Chris put is rather succinctly, "Playing dumb is not an option!" They were all playing "double-or-nothing" - and got it!

 

[Smiley]

Onlooker, your points have already been made many times on this forum and do not believe everyting you read/hear in papers - the media. This is untrue:
"Many people instructed Storm Financial to switch to cash. Had Storm Financial acted on those instructions, a lot of pain could have been avoided. But here's the kicker: not one of those instructions was acted on"

Many people who signed the Storm October paper to sell their portfolios, were sold down in Oct and Nov or Dec - al ended up with little left or in negative territory . . . such is

 

[carey ramm]

The Front Page of Every Newspaper Tomorrow!!

Slater & Gordon and Commonwealth Bank map way forward for Storm clients

National law firm Slater & Gordon and Commonwealth Bank of Australia (CBA) will implement an accelerated resolution process designed to achieve a fair and equitable outcome for former Storm Financial clients who entered loan agreements with CBA or Colonial Geared Investments.

Key features of the process include:
· An individual review by CBA of each client’s circumstances assessed against a framework developed in consultation with S&G;
· Full and frank disclosure of documents and facts relevant to each client by CBA;
· The provision by S&G of independent legal and financial advice paid for by CBA;
· A commitment to good faith negotiations; and
· Former High Court Justice Ian Callinan as an independent arbitrator where agreement cannot be reached between CBA and the client.

S&G and CBA have nominated a group of S&G clients, selected at random, to take part in the resolution process.

The process does not prejudice the ASIC investigation that is ongoing or anything flowing from that investigation.

CBA has agreed that any clients who participate in the process will still be able to participate in any outcome arising from the ASIC investigation, on the basis that they are placed in no worse position as a result of participation in the process.

CBA has also agreed that any client who is dissatisfied with an arbitrated outcome remains free to pursue any legal remedy available to that person.


Now i am sure that this will be very welcome news to all those storm victims who regsitered with Slater and Gordon. It is a great outcome and avoids lengthy litigation.