Storm Financial Group

RE "Seems pausible but somewhat contradicted by sending letters out seeking authority to convert everyone to cash."
But then storm sat on those authorities for weeks (late october, early nov some portfolios were sold down) and some portfolios were never converted to cash. Even then the cash only got placed in the interest earning cash management trust after weeks of the stormified negotiating with banks like macquarie - another stuff up by the 'advisors'.
I totally concur with the comments of the employee who said that Manny knew clients were in trouble and storm workers were told to present a happy front in the latter days (Oct-Dec) as have talked to various ex-employees . . . Manny was looking over their shoulders as they sat at the computers with peoples portfolios listed as being in negative equity and he just said, "ah well."
He thought the banks would carry the clients and storm.

Smiley said:

RE "Seems pausible but somewhat contradicted by sending letters out seeking authority to convert everyone to cash."
But then storm sat on those authorities for weeks (late october, early nov some portfolios were sold down) and some portfolios were never converted to cash. Even then the cash only got placed in the interest earning cash management trust after weeks of the stormified negotiating with banks like macquarie - another stuff up by the 'advisors'.
I totally concur with the comments of the employee who said that Manny knew clients were in trouble and storm workers were told to present a happy front in the latter days (Oct-Dec) as have talked to various ex-employees . . . Manny was looking over their shoulders as they sat at the computers with peoples portfolios listed as being in negative equity and he just said, "ah well."
He thought the banks would carry the clients and storm.

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Has any one actually confirmed that the forms 'cashing out' the investments were actually sent?

Is it possible the reason why people didn't receive margin calls and were sold down was because it was as result of the 'cashing out' and not a margin call?

Just witnessed EC's grilling at the Inquiry.

One thing you can say is that he is consistent, it's all the banks' fault.

JC couldn't make it, EC said she's unwell.

It will be a good transcript to read.

Bit of an issue when EC's silk spoke out of turn and upset Mr Ripoll.

Another highlight was when there was a disapproving geer from the gallery when EC said that clients were warned that they could lose their homes using the Storm strategy.

Very interesting times ahead.

Solly, what was their response to JC not being there?

Also, did EC look sick/under the pump?

Ironhalo said:

Solly, what was their response to JC not being there?

Also, did EC look sick/under the pump?

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Nil response to JC not being there.

EC looks fine, calm and deliberate in his reponses, even managed a joke or two.

Thanks Solly for the updates!

carey ramm said:

Hi Ya Shibby!!!

i am most interested in your comment that your adviser had sold their portfolio up but was under instructions not to sell your portfolio.

In recent weeks i have become aware that during the may to september period some of the advisers sold their private portfolios. I am collecting information on which advisers and dates.

Shibby can u tell me (either in a post or as a private message) which adviser u had and what date they told u they had sold their portfolio.

.

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Anne O'Neill from the North Sydney Office - It was the 30th September,2009 but her words were she had sold herself up but was not allowed to sell me up meant that it could have been that day or any other day before.
She actually was sitting at her desk and she mimicked reaching over to the telephone and said it was easy I just picked up the phone.
I want someone to ask her to produce her reconciliation sheet that Storm mailed to us all it has the date that the shares were sold.
Words like fiduciary duty????? where was it? There was a complete lack of any concern any loyalty how do you legislate for that how do you make people in a position of trust, trustworthy.
Steve Borden.
My understanding is that most people recieved the letters for a sell up, first a 50% followed shortly by 100% but they didn't action them all. I know of two cases where they never actioned the letters up until Storm closed its doors.

Judd said:

I would bet that they didn't know that they didn't need it. From the comments from a number of the ex-Storm clients and the contents of the submissions to Parliament, EC and crew put the fear of running out of money in retirement in front of anything else. Convince people that they do not and will not have sufficient funds, whatever their assets levels, to be able to retire, convince them that the age pension will disappear, convince them that they will not be self-funded retires, convince them that you are the expert and they know little about investing. Play on the emotions and you have got them.

And, boy, did these people get taken for a ride. Just think about it. $100,000 borrowed at 10% is $10,000. $7,000 fee taken from the $100k. The remaining $93k would have to return $17k (18.3%) in the first year (before tax considerations) just to break even. That's credit card territory but bamboozle tyro's with numbers and those "small" issues disappear.

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Agree that the "fear" on having to rely on the govt pension has been a recurring theme in submissions. I can state that their information sessions spent a lot of time on showing the effects of tax and inflation on savings, and how it was necessary to invest in a way that would keep you ahead of this. I wish I could claim to have had more than enough to be happy with prior to investing with storm, but alas I was merely a mid-forties self-employed parent who owned three-quarters of a bog-ordinary home, a modest equity in our business, some super (but nowhere near enough to retire on yet), very little in the way of investments and a few "toys". My desire was to use the equity we'd built up in our home to make enough to pay it off entirely and ensure we had enough to retire on when that great day came. Of course I now own one-quarter of my home and have a piddling amount left invested - and the toys have been sold to reduce debt I thank God that we're still young enough to hopefully work our way back to where we started in the first place.

As far as the calculations above regarding returns goes - the whole "model" was always portrayed as a long-term one, and to expect to break even in the first year is unrealistic. The 7% fee was a one-off and there were very low ongoing trails after that (Storm were covering buy/sell spread) - so if funds were invested for 10 years or more (as was my intention) the actual return required to cover interest and fees was nowhere near 18% - more like 11% pre-tax. Once the taxation benefits were factored in (if on a mid to high tax bracket) then the ave annual roi required to break even drops to 7 - 8% pa. If you average out the annual return of the all ords over the past many years this is not unattainable. Of course, when you get years where black swans sh#t all over the place it'll take a hell of a lot longer to get square. As I see it now, Storm's (and therefore also my own) major error was in "holding on" after the initial 20% fall - I now know this would have been a prudent time (if not before) to cash out and wait for the swans to disappear over the horizon.

Don't get me wrong - I'm not trying to justify their fees. I now know (after having done the research I should have done in the first place ) that I can acheive more or less (prob more) the same returns by putting what I have left in STW, Argo, Aust Found etc etc for a fraction of what they were charging for doing more or less the same thing.

bunyip said:

Storm investors group co-chairman Mark Weir, who founded the action group, said there was no point now blaming Storm because it had been totally obliterated by the Commonwealth Bank.

An extraordinary statement from Mark Weir.
Seems to me that this bloke is a real Cassamatis fan who is intent on deflecting the heat away from EC.
Even without the prospect of getting any money out of Storm, I would have thought that Weir and his SICAG committee would have Storm squarely in their sights for all the lousy things they've done.

What's also intriguing is that Mark Weir thinks it was the CBA who obliterated Storm. I believe that Weir needs to open his eyes and realise that Storms income had all but dried up due to a lack of new clients signing on.
Even if CBA hadn't lowered the boom on them, does he really think Storm could have continued to operate without a healthy supply of new customers to fleece to the tune of 7%?

Big Max - your comments, please?

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One phone discussion with Mr Weir was enough to convince me not to join SICAG. I asked whether they were open to the fact that the "model" and advice were clearly flawed and was told in no uncertain terms that unless I could prove illegal conduct I probably shouldn't be making such comments. He struck me as a man who was totally unprepared to listen to any point of view that didn't align with his own and I was left with the impression that any anti-Cassimatis sentiments were most unwelcome. It doesn't surprise me in the least to read that he sees no point in blaming storm - this no doubt would not suit his own agenda. I have always felt that although the support and friendship a lot of people have found through SICAG is wonderful, the whole organisation was set up purely to put pressure on the banks - using people power. Some of these people may benefit a little in the end, but you can bet your life that they'll also have been used to benefit those with the most to lose/already lost even more.

Julia said:

If you want to persuade people to your point of view, you first lay the groundwork by offering them sympathy, understanding and all that warm fuzzy stuff.

You have the ideal base to work from - a lot of people who are shocked, hurt and bewildered. A shoulder to cry on is just what they seek, and are then so grateful for.

I am quite carefully not accusing SICAG here, just making a quite general observation.

I'm mystified as to what SICAG's real agenda is.
.

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Another way to persuade people to your point of view is to slip them some money under the table to get them out of strife that has come out of company funds. Pretty hard for the same people to then turn around and "bite the hand that fed them". I know some people that won't hear a bad word about E & J - and I'm not surprised why.

CBA panic led to Storm collapse: Cassimatis

"
The founder of Storm Financial, Emmanuel Cassimatis, today blamed the Commonwealth Bank for panicking and withdrawing credit from his business, leading to the collapse of the financial planning business with investor losses of up to $3 billion.

In a rare public appearance before a federal parliamentary committee sitting in Brisbane today, Mr Cassimatis blamed failed processes within Commonwealth Bank for the events that led to Storm's collapse, culminating in Commonwealth Bank withdrawing credit.
"



STUART WASHINGTON IN BRISBANE - September 3, 2009 - 11:13AM

http://business.smh.com.au/business/cba-panic-led-to-storm-collapse-cassimatis-20090903-f93p.html

Quincy said:

CBA panic led to Storm collapse: Cassimatis

"
The founder of Storm Financial, Emmanuel Cassimatis, today blamed the Commonwealth Bank for panicking and withdrawing credit from his business, leading to the collapse of the financial planning business with investor losses of up to $3 billion.

In a rare public appearance before a federal parliamentary committee sitting in Brisbane today, Mr Cassimatis blamed failed processes within Commonwealth Bank for the events that led to Storm's collapse, culminating in Commonwealth Bank withdrawing credit.
"



STUART WASHINGTON IN BRISBANE - September 3, 2009 - 11:13AM

http://business.smh.com.au/business/cba-panic-led-to-storm-collapse-cassimatis-20090903-f93p.html

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I don't know what planet Cassimatis comes from, but I find it quite hard to believe that he somehow thinks the CBA was "obliged" to support his business when it was quite clear that it was insolvent and unable to pay it's debts. Actually, whether storm the business was broke or not is irrelevant in a way to its clients as they were not invested with storm, but in managed funds. That he expected the bank to simply carry negative equity on all storm's client's margin loans until some uncertain time in the future when the market recovered (and what if it hadn't?) is ludicrous. Since when do banks extend credit from the goodness of their hearts - as a shareholder I wouldn't want them to. I run a business and have equipment financed through banks - would I expect them to carry my loans for some unknown period of time without any extra security if I couldn't meet my commitments?? Yeah, when pigs fly!

Storm Financial product 'like ordering Big Mac'

3/09/2009 12:21:01 PM

http://money.ninemsn.com.au/article.aspx?id=857822

Former Storm financial boss Emmanuel Cassimatis has compared his company's "financial advice" product akin to ordering a Big Mac off the menu at McDonald's.

Mr Cassimatis has spoken about the Townsville-based firm's collapse during a federal parliamentary Inquiry into Financial Products and Services in Australia, in Brisbane on Thursday.

He admitted his financial advisers had adopted a one-size-fits-all approach when it came to giving clients a product to invest in, regardless of their situation.

A 70-year-old pensioner was given the same product to invest in as a wealthy financially independent investor, he said.

"McDonald's would be the classic (example) - they (have) the burgers and that's what they have and if you don't want it you go elsewhere," Mr Cassimatis said.

He also compared his company's model to that of a specialist doctor, such as a podiatrist, and said his product catered for a particular type of investor.

However Mr Cassimatis came under fire from the parliamentary committee, after he admitted that people were only rejected from investing in their product on the "odd occasion".

The inquiry heard that one in four people who walked through Storm's doors ended up investing in their product and it would take them 200 days on average to do so.

The inquiry has heard Storm customers were encouraged to take out mortgages against their homes to secure margin loans to invest in indexed share funds.

When the Australian Stock Exchange plummeted late last year thousands of clients' share portfolios were sold out at negative equity leaving them with debts they could not meet.

Many have been forced to sell their homes to repay the debt.

Mr Cassimatis told the inquiry he had warned potential clients they risked losing their homes.

However, when saying this, clients who were watching the inquiry yelled out at Mr Cassimatis, labelling him a liar.

He also blamed the company's collapse on the Commonwealth Bank for hitting the "panic button" when the global financial crisis hit last year.

The inquiry continues.

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Steve Borden said:

Seems pausible but somewhat contradicted by sending letters out seeking authority to convert everyone to cash.

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Perhaps such letters were simply window dressing. It seems they were not actioned.

DocK said:

I don't know what planet Cassimatis comes from, but I find it quite hard to believe that he somehow thinks the CBA was "obliged" to support his business when it was quite clear that it was insolvent and unable to pay it's debts. Actually, whether storm the business was broke or not is irrelevant in a way to its clients as they were not invested with storm, but in managed funds. That he expected the bank to simply carry negative equity on all storm's client's margin loans until some uncertain time in the future when the market recovered (and what if it hadn't?) is ludicrous. Since when do banks extend credit from the goodness of their hearts - as a shareholder I wouldn't want them to. I run a business and have equipment financed through banks - would I expect them to carry my loans for some unknown period of time without any extra security if I couldn't meet my commitments?? Yeah, when pigs fly!

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Great post, Dock, as was your previous one.

Steve Borden said:

Seems pausible but somewhat contradicted by sending letters out seeking authority to convert everyone to cash.

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That was quite likely just a publicity stunt to make it look like Storm had the situation under control.
Clients have told of how they signed those letters of authority and returned them immediately, but EC still didn't convert them to cash.

shibby said:

Anne O'Neill from the North Sydney Office

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And here she is again or was. You have been warned dear readers. She apparently has left that firm but beware of the name - and the associated reputation.

http://business.smh.com.au/business/storm-planner-providing-advice-20090830-f40w.html

Storm planner providing advice
STUART WASHINGTON
August 31, 2009

A FORMER Storm Financial planner has been working in North Sydney, advising people on their remaining Storm-affected finances, to the distress of some former customers.

The planner, Anne O'Neill, was working last week as an authorised representative of another financial planning group, AAA Financial Intelligence, which charges commissions on investments of up to 6.6 per cent.

Continued

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Storm boss under fire from inquiry

By David Barbeler | September 03, 2009 -4:02pm

Outside the inquiry, Mr Cassimatis apologised to Storm clients.

"I am sorry for everything that's gone on,'' he said. "I'm working every single day to try and remedy that.''

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http://www.theaustralian.news.com.au/business/story/0,28124,26021601-36418,00.html


Hmmm . . . .

http://cassimatis.com.au/

I was looking for gg today but couldn't see him although things were rather rushed especially in the scrum around EC as he left the centre.

Maybe I didn't recognise him without his hat and cuban. Hope he didn't run into problems with the baggage handlers loading the castration kit in the hold.

Not sure if he has his gphone with him or we have to wait until he's back in the Garpal Den but a post from him about today's proceedings would be very interesting and welcomed.

"Storm Financial boss under fire from inquiry"

"FORMER Storm Financial boss Emmanuel Cassimatis has come under fire for the firm's blanket approach to investors who have lost their homes since its collapse.
He was also called a liar by angry clients when he spoke at the federal parliamentary Inquiry into Financial Products and Services in Australia, in Brisbane today."

Read more by David Barbeler from News.com.au & AAP here;

http://www.news.com.au/business/story/0,27753,26021601-31037,00.html

"Storm founder gives evidence at inquiry"

"Mr Cassimatis told the federal parliamentary inquiry he does not know why the banks did not warn his customers when their investments fell below a certain level.

He told the Brisbane hearing the banks should have issued 'margin calls'.

"I went straight to the bank and said 'guys there's a problem here - you didn't issue the calls, you didn't do what contractually what should've happened'," he said.:

More by Emma Pollard from the ABC here;

http://www.abc.net.au/news/stories/2009/09/03/2675567.htm

Solly said:

I was looking for gg today but couldn't see him although things were rather rushed especially in the scrum around EC as he left the centre.

Maybe I didn't recognise him without his hat and cuban. Hope he didn't run into problems with the baggage handlers loading the castration kit in the hold.

Not sure if he has his gphone with him or we have to wait until he's back in the Garpal Den but a post from him about today's proceedings would be very interesting and welcomed.

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Thanks for going along Solly, Much appreciated!

I'll go to the Canberra hearing on the 16th and report back! won't be anywhere near as good as watching EC squirm though...

It appears that nobody asked Cassamatis why he didn't to convert his clients to cash rather than do nothing while the value of their portfolios was decimated.
That is the main question he should have been asked, in my opinion.
If he'd managed the situation by moving clients to cash when the market had fallen by say 25%, and put them back into the market when the recovery got underway, many of them would now be in a pretty good position.

The banks, the global financial crisis, the level of gearing, have all been blamed for the demise of Storm and their clients. The real blame lies with the sheer incompetence of Storm in that they failed to manage the situation.
The economic meltdown and market crash didn't wipe out everyone who had margin loans. Those who were more switched on that Cassamatis had the good sense to retreat to cash in plenty of time to avoid disaster. Cassamatis didn't, and it was this failure on his part, more than any other factor, that caused the wipeout of so many of his clients.
To my way of thinking, this is criminal neglect and he should go on trial for it.