Storm Financial Group

"CBA feels wrath over Storm collapse"

"Some former customers of Storm Financial have called for a Royal Commission into the company's collapse.

A parliamentary inquiry into the financial services sector has questioned the founder of Townsville-based company Storm Financial in Brisbane today."

Bank executives are expected to speak at the sitting in Sydney.

More from the ABC here;

http://www.abc.net.au/news/stories/2009/09/03/2676088.htm

"Storm made secret CBA deal"

"A SECRET deal between Commonwealth Bank and Storm Financial has been revealed as a factor behind $3 billion in investor losses.

Details outlined in a letter from Colonial to Mr Cassimatis said in the unlikely event of margin calls, CGI ''will work in partnership to clear the margin call''.

''This 'will work in partnership' strikes me as being nearly the nub of the entire issue,'' said Senator Brett Mason, who later speculated a close relationship with Storm may have led to a relaxation of bank standards........

A disenchanted former Storm staffer, Ron Jelich, described Storm Financial as ''a wild or unrealistic dream or idea'', because it did not have the cash reserves to meet its obligations when the crash occurred.

Mr McArdle compared Commonwealth Bank's actions to the institutional corruption uncovered by the Fitzgerald royal commission into the Queensland police."

More by Stuart Washington in The Age;

http://business.theage.com.au/business/storm-made-secret-cba-deal-20090903-fa05.html

"Six key issues emerge in fiasco's wake"

"Storm Financial lived up to its name again yesterday as co-founder and chief executive Emmanuel Cassimatis broke months of silence to give his side of the story about the collapse."

Read more in the Australian Financial Review Friday, 04 September 2009 in COMMENT by Duncan Hughes

"Storm Financial's Emmanuel Cassimatis sorry for investors"

"THE co-founder of failed Storm Financial apologised yesterday for the hurt caused to investors but he once again blamed that the Commonwealth Bank for destroying his advisory firm.

Emmanuel Cassimatis told a parliamentary inquiry in Brisbane this morning that he still feels the "crushing effect'' every day of the disaster, which saw 3000 clients lose their life savings."

More by Anthony Marx in the Courier Mail here;

http://www.news.com.au/couriermail/story/0,23739,26021076-3122,00.html

Garpal Gumnut said:

I will be brief as I am quite tired from travelling coach to and from Brisbane, attending the Inquiry and other brief activities not suitable to expand upon on this forum.

The Inquiry restored my faith in democracy in Australia.

Manny Cassimatis looked older than when I last saw him at Peppers Hidden Vale tucking in to a Waigu steak, just five moths ago.

Manny Cassimatis was unconvincing and repetitive in his evidence to the Inquiry much as a McDonald's executive would be in denying that a lifetime of big Macs in no way contributed to his terminal bowel cancer.

His lawyer bobbed up briefly to earn his $5000 for the day but was swatted by Sen. John Williams and thereafter attended to his hose.

The Inquiry members in particular Bernie Ripoll and John Williams were magnificent. They cut to the chase in a forensic manner and let Manny tighten the rope, challenging his bizarre take on financial planning appropriately.

The public , media and Storm victims were scathing about the Storm model and the SICAG model.

I was greatly surprised that nearly all Stormers had heard of Aussiestockforums and were now getting their information and advice from ASF rather from the SICAG site.

Some expressed disgust at the former Storm Logo on the SICAG site, the connection of committee members to Storm and Storm advisers, the advice on the SICAG site to seek out financial advisers who followed Storm principles and the failure of SICAG to in any way attribute blame to Storm or the Cassimatis.

I doubt if next January SICAG will have enough people renew their membership to afford a candle to shine a light on a moneyspider.

The victims were scathing about the banks and look forward to Norris of CBA fronting the Inquiry.

The Storm victims were one and all good people, battlers, hard workers, the backbone of our country.

They have been let down by Storm, SICAG and the Banks.

The only shining light for them are their Lawyers, Scattini et al, and the Inquiry.

gg

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gg, great to see you made it down, it's not that pleasant in 'cattle' when you aren't used to it. It's a pity the days are now gone when people of stature could grab a jump seat at short notice with a local crew on one of TAA's T-Jets.

I tried to get a couple of pics of proceedings but some mysterious force zapped my Nikon D3X. I wonder what the problem could be ?

From newspapers: "Now it was Mr Cassimatis with tears in his eyes. They welled, but they didn't run."

Anti-social personality disorder is a newer term for sociopaths like EC - he cries for himself and not others . . . more characteristics include:
"Lack of concern regarding society’s rules and expectations; unlawful behavior; lack of regard for the truth" . . .sound familiar?

Just a small sample of EC and storm lies follow:

- we have a unique strategy and critics are just jealous
- our investment strategy is not speculation
- our fees are the lowest in the industry
- our advisors are the highest qualified in the industry
- your house will never be at risk
- you have brokerage rights so we convert to cash at trigger points
- we closely monitor portfolios
- we don't gt trailing commissions (what about .35%?)
- there is only ever one fee for advice (oops didn't mention "step ups")
- fees are claimable on taxes
- the share market is safer than property investment
- the aged pension is being removed by the govt
- LVRs are conservative (did not include home loans)
- we get discounted loan rates for you
- storm is your good fortune.

others care to add to the litany of untruths - gaol time is well deserved . . . .EC & JC are still living in their 6 bedroom, 7 bathroom, 1500 sq metre mansion . . . surprised some of you down in Bris have not camped on their lawn if you're homeless

Give me a break . . . Re it's the bank's fault because they wouldn't lend us millions to prop up a bad business model . . . another ploy by a crook . . .deflect attention from own wrongdoing

big Max - better let Mark and Noel know the stormified up north are not happy with their lack of criticism of all things storm . . . .

I’ve only followed this saga from time to time so I’m not well qualified to comment on any of the details. But I did attend the afternoon session of the Senate Inquiry in Brisbane yesterday in the capacity of an interested bystander (I’m not connected with Storm in any way) and was astonished listening to the submission of the 3 representatives of SICAG. They made a long winded introduction in which they wasted valuable submission time praising this nation, democracy, blah, blah, blah and then chose to limit what they did say to fanning the flames regarding a terrible conspiracy between the CBA and Storm but when it soured CBA pulled the plug.

So they seem to think the outcome was all a vindictive plot hatched by the CBA to grab their money and run. They don’t seem to understand the concept of personal responsibility, said they still trusted their Storm advisers implicitly and when one of them gave an explanation about their margin loan, they demonstrated to me at least, a poor understanding of it and seemed confused. At the end of their submission they got a standing ovation from most of those present. I was left shaking my head in disbelief. If these people are representing the interests of the ex-clients of Storm, I would be worried.

Solly said:

I tried to get a couple of pics of proceedings but some mysterious force zapped my Nikon D3X. I wonder what the problem could be ?

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Solly

I am not an expert biologist but my understanding is that the species you attempted to photograph (the Emmanueli Cassimati) is notoriously hard to capture on film after certain events.

The Emmanueli Cassimati is a parasitic invertebrate exists simply to feed off its host, once it has drained the host of its life-savings it moves on, however it can also fall prey to larger forms of itself, they are known as Banks.

Once the Emmanueli Cassimati has fallen victim to effectively itself it becomes reclusive and very hard to detect, it is also very difficult to photograph because as you can appreciate without other people's money forming its backbone it tends to become only a reflection of itself.

In summary the are considerable difficulties in photographing the reflection of a spineless parasite.

Or so I am told.

Schumy - not all the stormified are as naive as SICAG founders/or loyal to their family in this weird way . . . makes me mad this happened at inquiry - waffling bs and support of the model; but then storm has been compared to a cult at times and true believers are often blind. . . .
well said Steveo. . . .am sure the alani bondi and the christo skaso are well proven to be related to the cassimati species - not a totally new finding

thought it timely to post this position from cba written to the 60 minutes producer jonathon harley

Commonwealth Bank statement to 60 Minutes re: Storm Financial
3 March 2009
Hi Jonathan
Further to our conversation, as explained, in view of the Cassimatis litigation and ASIC inquiry the CBA does not believe it is appropriate for a representative to appear on your program.
We are, however, concerned and sympathetic to those who followed financial planning advice from Storm Financial and are seeking to assist them where feasible.
We have already assisted your preparation of your story and are providing the following responses to your questions to assist the accuracy of the 60 Minutes program.
The Bank considers the collapse of the Storm Financial group to be serious, complex, and extremely unfortunate for those involved and the issues of responsibility are matters that are already being tested in the appropriate forums.
A) How/why did were clients sold down in the ColonialFund?
Colonial Geared Investments (CGI)
 Since the collapse of Storm Financial, there have been allegations aired in the media that CGI “dropped the ball” in relation to margin calls. These allegations are untrue – CGI kept its part of the agreement in the margin call management process.
 It’s important to understand the roles of CGI and Storm Financial (borrower’s financial planner) in the margin loan management process.
 CGIs role is to keep Storm Financial up to date with the relevant information concerning their client’s margin loan.
 The role of the Storm Financial (under the authority of the borrower) is to manage the portfolio regarding the level of indebtedness and the purchase or sale of security.
 Storm Financial clients were sold down when Storm Financial advised CGI who and how much should be sold. When the clients’ Margin Loans went into margin call, Storm Financial advised CGI what should be sold / redeemed to clear the clients margin call in full. This process worked well over the past decade. Storm Financial continued to meet its responsibilities even as the market started to fall. In October and November 2008 Storm Financial instructed CGI to effect $672 million worth of sales to address clients’ loans in margin call.
 However, as the markets continued to fall, Storm Financial’s instructions became inadequate to clear margin calls. In November 2008, CGI was forced to step in to ensure all margin calls were addressed in full. If this had not happened, Storm Financial clients would have accumulated more losses as the market continued to fall. After attempting to obtain instructions from Storm Financial in line with the practice of the past decade, it became apparent that Storm Financial’s response to size and duration of the market fall was seriously inadequate. CGI formed the view that Storm Financial was no longer fulfilling its role in relation to margin calls.
 Under the margin loan, CGI reserves the right, if the borrower fails to address a margin call, to sell down the security on the margin loan. We instructed redemption requests totalling around $178 million of CFS, Challenger and MLC in an effort to clear these clients’ margin calls.

B) Do we have a responsibility to these clients– weren’t they our customers as a result of their Margin Loan being provided by Colonial Geared Investments?
 The Bank met its responsibilities to these customers, and our customers also have responsibilities to us. Those responsibilities are governed by the terms of our agreements – in this case the Margin Loan terms and conditions.
 Under the Margin Loan agreement, each Borrower expressly authorised CGI to deal directly with Storm Financial in relation to the margin loan and to take instructions from Storm Financial. This is the case with all CGI’s margin loans, not just those of Storm Financial clients. The arrangement reflects the fact that CGI’s margin loan is a product designed to be offered through licensed financial planners and the product model is for CGI to deal with the planner directly. If borrowers want to deal directly with the Commonwealth Bank in relation to a margin loan, then they have the option of a CommSec Margin loan. (Storm Financial did not recommend the CommSec Margin loan to its clients.)
 CGI offered the tools through which these investments could be geared – ie the CGI Margin Loan. CGI did not offer any advice; its role was that of lender.
 All investment advice to Storm Financial’s clients was given by Storm Financial under a formal Statement of Advice. Pursuant to these Statements of Advice, the Storm Financial clients were mainly invested in CFS Funds, Challenger Funds and MLC Index Funds.
 CGI had the responsibility of keeping Storm Financial fully updated with data on every margin loan held by Storm Financial clients. We took our responsibilities seriously, providing data to Storm Financial daily on each and every client’s margin loan. On top of this we provided up to date data on our web site (for both advisers and clients) which can be utilised 24/7 to check the clients account. Storm Financial accessed this data over 11,000 times. On two occasions this data did not transfer across to Storm Financial correctly. Storm Financial informed us and we sent a new file immediately.
 Our borrowers had the responsibility of monitoring their portfolio and taking any action required to avoid or clear a margin call. At any time, any of these borrowers could have contacted Storm Financial and obtained the current details of their margin loan portfolio from Storm Financial (based on the information CGI supplied to Storm Financial on a daily basis).

C) How Storm clients could take out home mortgages to fund their Storm investments?
 Customers use the security of their home loan investment for a number of reasons, including other investment categories.
 The Commonwealth Bank provided home loans for Storm Financial clients who applied and met the Bank’s lending criteria. We assume that these customers’ decision to apply for home loans with the Bank was taken on the basis of advice given by Storm Financial.
 Any home loan customer of the Bank who is a former Storm Financial client and is having difficulty meeting their home loan commitments should contact the Bank to discuss their options. The Bank has a range of measures available to provide flexibility for borrowers in financial hardship.

Monario said:

True Bunyip, but in doing so Manny would have also been reducing his income stream from the commsions he was recieving, would he not? A pure conflict of interest.

The comment he made also about taking over his clients loans also seems to me to point to the fact that he would have lost these commisions, why else would anyone take on such a large, bad debt? surely it had to be the fact that the debt would have been creating an income..

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Ah yes, Blind Freddy can see why Cassamatis didn't convert clients to cash in time to save their portfolios - it was all about money for him, as usual. Converting clients to cash would have put a serious dent in his income.
Of course he will never admit as much, but it would have been interesting to watch him squirm if they'd nailed him down with hard questions such as 'When the market was dropping and the value of your clients portfolios was evaporating further every day, why didn't you address the situation by converting your clients to cash until the market recovered?

As for taking over his clients loans, I doubt if he ever had any intention of doing so. I'd say it was just a PR exercise to make him look like a good bloke who really cared about his clients.

Interesting Ironhalo, about the end of transmission thing....
We had a few rather brief visits from "dark leopard" here at ASF.
Funnily enough, dark leopard would say "end of transmission".

And, where is Big Max? Would love to hear his unique spin on things.
Mark Weir will bluff until the end.
Criminal charges will laid, guaranteed.

Big Max

In view of the information that's come to light over the last couple of days, both at the Enquiry and through this forum, I think it's time you favoured us with another of your posts.
In particular, I'd be interested in hearing your reponses to Posts 3251 & 3254 from Ironhalo, Post 3248 from GG, and Post 3266 from Smiley.

Come on Max - it's not like you to be short of words. We look forward to hearing from you.

Thanks Carey

I could be wrong but is the CBA saying that "In October and November 2008 Storm Financial instructed CGI to effect $672 million worth of sales to address clients’ loans in margin call". and "Under the margin loan, CGI reserves the right, if the borrower fails to address a margin call, to sell down the security on the margin loan. We instructed redemption requests totalling around $178 million of CFS, Challenger and MLC in an effort to clear these clients’ margin calls".

If that is the case then Storm did know about the margin calls and actually acted upon them in a majority of the cases, it was only at the death when Storm wasn't responding did they (CGI) act on their own.

I also have evidence that Storm did action some of the conversions to cash.

Please bear in mind the CBA (CGI) will have copies of the requests to sell down from Storm and will produce as necessary.

Therefore CBA has written evidence from Storm of something Storm said didn't happen.

I wonder who is not telling the truth?

bunyip said:

. . . As for taking over his clients loans, I doubt if he ever had any intention of doing so. I'd say it was just a PR exercise to make him look like a good bloke who really cared about his clients.

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Another PR excercise perhaps ?

As he walked out of the inquiry, The Courier-Mail asked how his health was coping with the Storm collapse. He stopped on the spot.

"Many years ago I had to haul a little girl out of a car that had been in a head-on collision," he said. "In that experience you don't have the luxury of worrying about how you feel.

" In times of stress, one does not have the luxury of self-remorse."

Now it was Mr Cassimatis with tears in his eyes. They welled, but they didn't run.

http://www.news.com.au/couriermail/story/0,23739,26023405-952,00.html

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schumy said:

I’ve only followed this saga from time to time so I’m not well qualified to comment on any of the details. But I did attend the afternoon session of the Senate Inquiry in Brisbane yesterday in the capacity of an interested bystander (I’m not connected with Storm in any way) and was astonished listening to the submission of the 3 representatives of SICAG. They made a long winded introduction in which they wasted valuable submission time praising this nation, democracy, blah, blah, blah and then chose to limit what they did say to fanning the flames regarding a terrible conspiracy between the CBA and Storm but when it soured CBA pulled the plug.

So they seem to think the outcome was all a vindictive plot hatched by the CBA to grab their money and run. They don’t seem to understand the concept of personal responsibility, said they still trusted their Storm advisers implicitly and when one of them gave an explanation about their margin loan, they demonstrated to me at least, a poor understanding of it and seemed confused. At the end of their submission they got a standing ovation from most of those present. I was left shaking my head in disbelief. If these people are representing the interests of the ex-clients of Storm, I would be worried.

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Thanks for your report, Schumy. Confirms the impression to date.

Carey, many thanks for the copy of CBA's comments to 60 Minutes.

This extract is telling:

 Under the Margin Loan agreement, each Borrower expressly authorised CGI to deal directly with Storm Financial in relation to the margin loan and to take instructions from Storm Financial. This is the case with all CGI’s margin loans, not just those of Storm Financial clients. The arrangement reflects the fact that CGI’s margin loan is a product designed to be offered through licensed financial planners and the product model is for CGI to deal with the planner directly. If borrowers want to deal directly with the Commonwealth Bank in relation to a margin loan, then they have the option of a CommSec Margin loan. (Storm Financial did not recommend the CommSec Margin loan to its clients.)

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Seems to confirm that Storm dropped the ball, rather than CGI.
Why am I not surprised!

Julia, I think there are a fair few of us here who are not surprised.

Manny is a conman. There have been Mannys before him and there certainly will be many more Mannys to come.

Julia said:

Thanks for your report, Schumy. Confirms the impression to date.

Carey, many thanks for the copy of CBA's comments to 60 Minutes.

This extract is telling:



Seems to confirm that Storm dropped the ball, rather than CGI.
Why am I not surprised!

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My loan agreement does not state any such thing. If they changed the rules at some stage they did not notify or obtain authorisation from clients to do so. Lender is to contact me as per Original financial plan and loan agreements.

B) Do we have a responsibility to these clients– weren’t they our customers as a result of their Margin Loan being provided by Colonial Geared Investments?
 The Bank met its responsibilities to these customers, and our customers also have responsibilities to us. Those responsibilities are governed by the terms of our agreements – in this case the Margin Loan terms and conditions.
 Under the Margin Loan agreement, each Borrower expressly authorised CGI to deal directly with Storm Financial in relation to the margin loan and to take instructions from Storm Financial.

Above is an extract from Carey's post.

Can any ex-Storm client confirm that you authorised CGI to deal directly with Storm, and take instructions from them in relation to your margin loan?
Some of you must have copies of that agreement if such an agreement was made.

If this claim from CGI can be proven correct, it will really blow Cassamatis out of the water in regard to his repeated claims that it was not Storms responsibility to advise clients when they were in margin call.

bunyip said:

B) Do we have a responsibility to these clients– weren’t they our customers as a result of their Margin Loan being provided by Colonial Geared Investments?
 The Bank met its responsibilities to these customers, and our customers also have responsibilities to us. Those responsibilities are governed by the terms of our agreements – in this case the Margin Loan terms and conditions.
 Under the Margin Loan agreement, each Borrower expressly authorised CGI to deal directly with Storm Financial in relation to the margin loan and to take instructions from Storm Financial.

Above is an extract from Carey's post.
Can any ex-Storm client confirm that you authorised CGI to deal directly with Storm, and take instructions from them, in relation to your margin loan?
Some of you must have copies of that agreement if such an agreement was made.

If this claim from CGI can be proven correct, it will really blow Cassamatis out of the water in regard to his repeated claims that it was not Storms responsibility to advise clients when they were in margin call.

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I have no such agreement and my loan agreement was in 2000. No notifications or changes advised. Also the bank stated their maximum LVR was 62% in my case. Funny how they let that blow out of the water!!! I think when Paul Johnston (original head of ML) left and Clothier things changed. My original agreement never changed!