There are now 142 pages arguing about this.I have been working my way through reading some of those submissions. There is some pretty scary stuff. I read the attachments on number 275. The response by John Clothier from CGI is very direct.
How are all these poor people going to dig themselves out of all of this. I wouldn't mind traveling up to Brisbane to sit in on these hearings.
These folk all sound like decent people just caught up in something out of their control. Where does the fault and blame really belong ?
I agree. Many of them are naive in the extreme.One of the main points that I have noted from reading the parliamentary submissions is that most of the people who invested with storm have very poor general knowledge and less than average communication skills... Combined with a complete lack of financial acumen.
Example:
http://www.aph.gov.au/senate/committee/corporations_ctte/fps/submissions/sub280.pdf Bottom of page 6
"On a number of occasions we expressed our concern that our investment
strategy was not sufficiently diversified but the answer was always that ”žwe
have our house‟. The reality was that we didn‟t have our house, it was
geared into the Investment- in effect double geared – as the funds borrowed
against the house were used to support further margin loan borrowings. This
scenario created a situation of ”ždouble jeopardy‟. Accordingly there should
have been some recognition of this in setting our LVR risk level."
Wiki definition of 'Double Jeopardy'
http://en.wikipedia.org/wiki/Double_jeopardy
It is my understanding that Queensland law does not allow for "class" actions, if this is the case the journalist is being a tad sloppy.
Rather, Slater & Gordon are acting on an individual case to test if the BoQ will do as CBA did for those who were Stormified (in regard to their loans).
Also in regard to Mr Weir's submission and his opening paragraph:
"The following is an attempt to describe our involvement in an episode in our
lives,the magnitude of which is unprecedented in the history of Australia in respect of the Financial destruction and human emotional toll it has inflicted on us and other members of the Queensland community and beyond."
The skeptic in me says this could be an exaggeration in regard to Manny's greed/the collapse of Storm. Would anyone here agree with Mr Weir that indeed this whole fiasco is unprecedented in the history of Australia?
There are now 142 pages arguing about this.
Where do you think the blame lies?
Do you think the people concerned made choices?
I agree. Many of them are naive in the extreme.
It's difficult to know whether they simply "didn't know what they didn't know" or did have an underlying awareness of the risks they were taking but forged on anyway with the encouragement of their dodgy advisers.
There are now 142 pages arguing about this.
Where do you think the blame lies?
Do you think the people concerned made choices?
I agree. Many of them are naive in the extreme.
It's difficult to know whether they simply "didn't know what they didn't know" or did have an underlying awareness of the risks they were taking but forged on anyway with the encouragement of their dodgy advisers.
The blame clearly lies with the systems that are in place to allow this to happen. I just have no idea what you need to have to do to stop this from happening again.
No. The blame does not lie with systems. Thousands of people have used these systems and facilities responsibly and successfully.The blame clearly lies with the systems that are in place to allow this to happen. I just have no idea what you need to have to do to stop this from happening again.
The blame lies with people. As a group we not all that bright and switched on. Cannot be bothered to ask the right questions because we are not sufficiently curious. Those who were and did ran a mile from Storm. Same as those who considered Henry Kaye, property spriuker, a charlatan and never believed that $52 a week would buy an investment property. And a lot of those were not necessarily financially literate or held university degrees. They just knew and it is something you cannot teach. Simply, as with Storm, those that stayed away knew, deep in their guts, that the numbers just didn't add up. You either have it or you don't.
I think what Mr Weir suggested is partly true, but only with regard to the fact that a single adviser group has never exposed such a large number of clients to the same aggressive, double gearing strategy without having an exit strategy. This was further exacerbated by the advisory group having close relationships with lenders that allowed prudent banking practice to be subverted in the pursuit of commissions and bonuses.
The financial destruction and human emotional toll flowed from this, the market did not create the issue, it merely exposed the issue.
The fact that this occured was not an if but a when, EC's problem is that occured before he was able to exit.
No. The blame does not lie with systems. Thousands of people have used these systems and facilities responsibly and successfully.
People as Judd correctly points out, attempted to misuse these systems and fell on their faces.
If you are going to borrow far in excess of what you know you can reasonably pay back, or are counting on an always rising market to allow you to cover the outgoings, then that is simply taking a massive risk.
Even if the lending procedures of the banks were, as it appears, irresponsible, it's still up to the borrower to work out his/her capacity to service these borrowings.
Don't blame perfectly functional systems.
The perfectly functional system that left me in margin call and did not contact and I had the capacity to lower LVR. Oh lets not forget the perfect system that had me in MC for 56 days and then sold everything, withdrew money from an account they had no approval to and closed the Storm baged index funds at the lowest point making people who didn't even have margin loans suffer. Yeah just perfect!
You are describing failed decisions by individuals. I have no idea to whom you gave responsibility for monitoring your margin loan.The perfectly functional system that left me in margin call and did not contact and I had the capacity to lower LVR. Oh lets not forget the perfect system that had me in MC for 56 days and then sold everything, withdrew money from an account they had no approval to and closed the Storm baged index funds at the lowest point making people who didn't even have margin loans suffer. Yeah just perfect!
You are describing failed decisions by individuals. I have no idea to whom you gave responsibility for monitoring your margin loan.
But what you describe above is not a failure of the margin lending system of itself.
If the problem were with margin lending per se then thousands of other people would be in the same situation as you. They are not because they have managed their situations differently.
That said, I hope there will be some positive outcome for you of the enquiries.
I think what Mr Weir suggested is partly true, but only with regard to the fact that a single adviser group has never exposed such a large number of clients to the same aggressive, double gearing strategy without having an exit strategy. This was further exacerbated by the advisory group having close relationships with lenders that allowed prudent banking practice to be subverted in the pursuit of commissions and bonuses.
The financial destruction and human emotional toll flowed from this, the market did not create the issue, it merely exposed the issue.
The fact that this occured was not an if but a when, EC's problem is that occured before he was able to exit.
Solly you are slipping. Interesting submission 369. I'll let you link it
I'm not sure but I think Solly might be away at the moment.
So the link to submission number 369.
http://www.aph.gov.au/senate/committee/corporations_ctte/fps/submissions/sub369.pdf
cheers
Maccka
My rellies in QLD have returned from the Slater and Gordon meeting held tonight in Redcliffe about half an hour ago. Some very interesting points have come out, with CBA senior staff in attendance that are heading up the Resolution Scheme:
1. CBA have acknowledged fault and mentioned that 'they will fix and compensate the actions they took', and will pay up to $8000 in legal fees per client to Slater & Gordan. CBA apologised to everyone present for their actions, and many people there appreciated the two young CBA guy's honesty and said they were genuinely shameful of the bank's actions.
2. Macquarie or any other banks are excluded for the time being. Anyone with a CBA/CGA loan will be eligible for financial compensation.
3. Storm advisers will be dealt with on a case by case basis and will be investigated and charged with fraud where applicable. S&G are being paid by the bank to pursue this, so guess who the banks will be chasing? Storm advisers are about to get their come-uppance.
4. Slater and Gordon indicated that 'Manny' will be found fully culpable for fraudulent business practices, and will be pursuing him in court. At this stage they are looking to 'take Manny to the cleaners.' Apparently Manny offered S&G $1 million to make the legal pursuit problems 'go away'. He was told in no uncertain terms to get stuffed. The insurers are being pressured as well legally.
5. SICAG have (and colour me surprised) dismissed EVERY ex-Storm affiliated member and associate ex-Storm employee as of this week noting the legal developments. There are un-substantiated claims that O'Brien may have left or been asked to leave SICAG noting the above.
6. ASIC's summary to Parliament to come at the end of Aug.
Stay tuned...very interesting times ahead.
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