Storm Financial Group

[bunyip]

Emmanuel and Julie had a phrase hard-wired into its computer-based Statement of Advice to the effect that (I am paraphrasing) "you do not have sufficient assets to finance a comfortable retirement . . .", thereby encouraging everyone to liquidate what they termed "lazy" or "dormant" assets and put the cash into Storm. Every other element in the computer-based matrix was alterable (name, address, dependents etc.) except for this phrase. So, regardless of whether you had $20,000 or $20 million in the bank, Storm's SoA said you didn't have enough assets to fund a comfortable retirement. Doesn't that say it all . . .?:22_yikes:

OK - So why don't SICAG divulge this sort of information on their website?
What you're implying is dishonesty on the part of Storm - namely, that they misled some people by telling them their assets were insufficient to comfortably fund retirement, regardless of how large their asset base may have been.

This is the sort of information that needs to be brought out in the open so as to give Storm as much negative publicity as possible. The more negative publicity they get through having their dishonesty and unscrupulous dealings revealed, the greater the likelihood of them being brought to justice.
And isn't that what SICAG is all about - justice for Storm clients?

 

[DocK]

OK - So why don't SICAG divulge this sort of information on their website?
What you're implying is dishonesty on the part of Storm - namely, that they misled some people by telling them their assets were insufficient to comfortably fund retirement, regardless of how large their asset base may have been.

This is the sort of information that needs to be brought out in the open so as to give Storm as much negative publicity as possible. The more negative publicity they get through having their dishonesty and unscrupulous dealings revealed, the greater the likelihood of them being brought to justice.
And isn't that what SICAG is all about - justice for Storm clients?

Bunyip, I'm not a member of SICAG so this is purely my own uninformed opinion, but I think you'll find that SICAG is all about compensation for ex-storm clients, and are either unconcerned with "justice" as such, or happy to leave that aspect to ASIC, parliamentary enq and/or the legal system.

Just my

 

[Rainbow]

From the above linked article...

Part of the agreement Mr McCulloch detailed was to lift the maximum loan-to-value ratio to 85 per cent for Storm clients with margin loans from Macquarie - increasing the maximum that Storm's clients could lose if they were sold out at that level.

BusinessDay believes the usual loan-to-value ratio Macquarie Group offered to almost all other financial planners was a more conservative maximum of 80 per cent.

A Macquarie spokeswoman refused to answer BusinessDay's questions on the issue.

BusinessDay has also seen correspondence from a former Storm Financial adviser that suggests Storm's arrangement with Macquarie's margin lending business included Storm dictating the timing of margin calls to Storm clients.

''Our agreements and ongoing communication (hour to hour) with MML (Macquarie Margin Lending) has ensured that either no margin calls are being actioned or we have significant control over the relationship [so] that MML is taking directions from us,'' a Brisbane Storm staffer, Stephen Halsall, wrote to a client on October 24 last year.

The lack of margin calls proved disastrous to many former Macquarie margin-loan customers. BusinessDay is aware of nearly 40 former customers, almost all of whom say they received no margin call when markets fell last year


My margin loan was with Macquarie and I can confirm that my statements confirm a "maximum gearing level" of 80% plus an additional "buffer" of 5%. I always thought that was way too high, but my adviser used to talk about it as a positive thing as it allowed storm clients to withstand more volatility and the ability to take advantage of "dips" (read crashing sharemarket).

I cannot verify the statement in the article re people not receiving margin calls until they were up to 95% lvr as my loan never got as high as 80%, but would be very interested to hear from any other stormers who were with Macquarie - I was always under the impression that any matters pertaining to the loan were between the lender and I, and had nothing to do with storm once it was set up. I would have been beating down Challenger's door demanding they sell my investments to repay Macquarie had I reached 80% lvr - never mind whether storm gave the go-ahead or not! It seems amazing to me that a lender would need the approval of a financial planner if their own client was giving them instructions about their own loan????

Hi, I was with Macquarie. One of the calls I received from them said I was in Margin Call at something like 137%. I don't recall signing paperwork that allowed them to increase the LVR, but it's obvious Storm arranged it with Macquarie who were happy to accept. My 'Financial advisor' told me not to deal with the Bank, when they rang, but to refer them to him. Macquarie has advised me that is has "decided not to pursue the outstanding amount on my loan", ie the negative equity.... lucky me. Just when I was ready to give them one on my kids in exchange.... I can't win a trick!

 

[DocK]

Hi Rainbow,

If you don't mind me asking - did you receive any communication from either Macquarie or your "adviser" prior to the margin call at 137% lvr? I find it absolutely amazing that the lvr was permitted to deteriorate to such a ridiculous level before any action was taken???? Do you know why you weren't sold out earlier? I'm assuming you weren't aware of the situation yourself?

Sorry to hear you're now stuck with your kids (joking) but it's extremely fortunate for you that Macquarie aren't going to pursue you for the outstanding loan amount - is it because they stuffed up perhaps?

 

[bunyip]

Well stated DocK. It's a shame GG, Ironhalo, Darkside, Farencue, Bunyip et al are so blinkered and fixated on moneyspidercentral that they can't smell the roses. Woof woof.:couch

Maxie

I'm actually pretty good at smelling the roses....I smelled thousands of them last weekend at the Toowoomba Carnival Of Flowers!!

Seriously Max - most of us who have had any criticism of SICAG have also acknowledged the good work they've done in bringing the banks to the negotiating table and getting them to admit their failings in relation to Storm investors.
You already know this - so why keep harping on about smelling the roses?
And as for your 'woof woof' comments - better to leave them out - they only make you look childish.

Our criticism is simply that SICAG...

*endorse the Storm fees model on their website

*have people on the SICAG committee whose presence constitutes a conflict of interest

*have been noticeably silent in regard to revealing information about the dishonest and unscrupulous dealings of Storm Financial....information that could increase the likelihood of Storm principles and advisors facing criminal charges

Good on SICAG for working towards bringing the banks to account for any wrongs they may have committed.
But it wasn't just the banks who were at fault - any fool can see that Storm were also at fault. They deserve to be brought to justice just as much as the banks do....irrespective of the fact that there's virtually no chance of getting financial compensation from anyone in the former Storm Financial.
SICAG needs to recognise this fact, and work towards getting charges laid against all the appropriate people rather than focusing solely on the banks.

 

[Julia]

When is the enquiry due to resume? I'd been told it was today, through to 29 September, then October 12 - 30, but the Parliamentary website has no reference to it.

Would appreciate any info. Thanks.

 

[Judd]

Julia, I believe you may be referring to dates concerning Federal Court issues rather than the Parliamentary Inquiry.

http://www.theage.com.au/business/storm-founders-summonsed-to-give-evidence-20090924-g3if.html

Storm founders summonsed to give evidence
September 24, 2009 - 11:11AM

The founders of failed advisory firm Storm Financial have been summonsed to appear at a Federal Court public examination next week.

Storm Financial, which claimed to have about $4.7 billion of funds under management and more than 14,000 clients, went into administration in January.

The Federal Court ordered the company be wound up in March with debts of around $80 million, leaving investors with huge losses and fears they may never recoup their money.

The first day of a public examination in the Federal Court in Brisbane today heard Storm founders Emmanuel and Julie Cassimatis had been summonsed to appear on Monday.

The public examination will hear from one examinee, senior company executive Michael Fenech, tomorow and former Storm staffer David McCullough on Tuesday, before adjourning until October 12.

The court heard the purpose of the examination was to enable the liquidator Worrells to be in a better position to effectively wind up the company.

The public examination is expected to run for 19 days.

At least seven companies - including Bank of Queensland and Commonwealth Bank of Australia - are expected to provide records relating to their business with Storm.

The examination is being held before Deputy District Registrar Heather Baldwin.

 

[Solly]

EC & JC have been summonsed to appear in court Monday 28/9/09

more to come...

 

[Steve Borden]

EC & JC have been summonsed to appear in court Monday 28/9/09

more to come...

I am informed that BoQ were to appear this morning and produce documents but didn't show.

 

[cuttlefish]

I agree that the bank appears to have failed in some of its duties in relation to responsible lending and possibly bears partial responsibility in some of the situations that occurred. But they certainly weren't the primary cause of the situation that led to people losing their investments and wealth.

What annoys me is that SICAG doesn't appear care about where the responsibility lies - all they care about is getting as much money out of the bank as possible because the banks have the money.

And your point is . . . .?

My point is that the irresponsible behaviour of Storm has not only cost Storm investors a lot of money - it has also cost the banks and (thus bank investors) a lot of money. A responsible financial advice firm does not encourage or support its clients entering into irresponsible lending arrangements inappropriate for their risk profile and their stage of life. But more significantly, a responsible financial advice firm would understand its clients financial situation enough to ensure that up to date and accurate information was included on completed loan documentation and would certainly not authorise or encourage the submission of inflated income or asset figures for loan applications.

If Storm staff knowingly encouraged or allowed incorrect information to be included on loan application forms then they were not only showing disregard for their clients, but they were also showing disregard for their business partners - the banks. If this is the case then that is behaviour that is unethical to both parties, and it appears to be greed driven behaviour.

But based on your comments, SICAG doesn't care about ethics either it would appear - its not about who is to blame, its about who has the money. Just get the money - thats all that was important to Storm, and thats all thats important to SICAG.

Greed without responsibility being repeated again.

 

[Julia]

Julia, I believe you may be referring to dates concerning Federal Court issues rather than the Parliamentary Inquiry.

http://www.theage.com.au/business/storm-founders-summonsed-to-give-evidence-20090924-g3if.html

Ah, that will be it. Thanks, Judd.
Is the enquiry that was being broadcast via the Parliamentary website over now, or is there more to come?

My point is that the irresponsible behaviour of Storm has not only cost Storm investors a lot of money - it has also cost the banks and (thus bank investors) a lot of money. A responsible financial advice firm does not encourage or support its clients entering into irresponsible lending arrangements inappropriate for their risk profile and their stage of life. But more significantly, a responsible financial advice firm would understand its clients financial situation enough to ensure that up to date and accurate information was included on completed loan documentation and would certainly not authorise or encourage the submission of inflated income or asset figures for loan applications.

If Storm staff knowingly encouraged or allowed incorrect information to be included on loan application forms then they were not only showing disregard for their clients, but they were also showing disregard for their business partners - the banks. If this is the case then that is behaviour that is unethical to both parties, and it appears to be greed driven behaviour.

But based on your comments, SICAG doesn't care about ethics either it would appear - its not about who is to blame, its about who has the money. Just get the money - thats all that was important to Storm, and thats all thats important to SICAG.

Greed without responsibility being repeated again.

This is certainly my impression also and is providing its own version of amorality.

 

[Solly]

"Fear could cost investors' justice: Storm group
Nothing to fear or loose"

"Fear and distrust is preventing ex-Storm Financial clients from signing up to the CBA's resolution scheme."

More by Kate Kachor in Investor Daily here;

http://www.investordaily.com.au/cps/rde/xchg/id/style/7470.htm

 

[Solly]

"Storm founders summonsed for evidence"

"The first day of a public examination in the Federal Court in Brisbane on Thursday heard Storm founders Emmanuel and Julie Cassimatis had been summonsed to appear on Monday."

More from AAP in The Age

http://news.theage.com.au/breaking-news-national/storm-founders-summonsed-for-evidence-20090924-g3jc.html

 

[Solly]

"Storm public inquiry begins in Brisbane"

A public examination of the failed advisory firm Storm Financial is underway in Brisbane.

The first witness is due to give evidence tomorrow.

More by By Jason Rawlins from The ABC here;

http://www.abc.net.au/news/stories/2009/09/24/2695417.htm

 

[Quincy]

"Fear could cost investors' justice: Storm group
Nothing to fear or loose"

"Fear and distrust is preventing ex-Storm Financial clients from signing up to the CBA's resolution scheme."

More by Kate Kachor in Investor Daily here;

http://www.investordaily.com.au/cps/rde/xchg/id/style/7470.htm

Simple carelessness leads some people to write loose when they mean lose. For a journalist to make this error however, well . . . . .

 

[Solly]

Simple carelessness leads some people to write loose when they mean lose. For a journalist to make this error however, well . . . . .

Hey Quincy, might have been a mistake by the sub, I'd hate to check may posts made at 11:30 pm on a Friday night especially when trying to compose a smartar*e reply to gg...:

 

[specialed]

OK - So why don't SICAG divulge this sort of information on their website?
What you're implying is dishonesty on the part of Storm - namely, that they misled some people by telling them their assets were insufficient to comfortably fund retirement, regardless of how large their asset base may have been.

This is the sort of information that needs to be brought out in the open so as to give Storm as much negative publicity as possible. The more negative publicity they get through having their dishonesty and unscrupulous dealings revealed, the greater the likelihood of them being brought to justice.
And isn't that what SICAG is all about - justice for Storm clients?

My point is that the irresponsible behaviour of Storm has not only cost Storm investors a lot of money - it has also cost the banks and (thus bank investors) a lot of money. A responsible financial advice firm does not encourage or support its clients entering into irresponsible lending arrangements inappropriate for their risk profile and their stage of life. But more significantly, a responsible financial advice firm would understand its clients financial situation enough to ensure that up to date and accurate information was included on completed loan documentation and would certainly not authorise or encourage the submission of inflated income or asset figures for loan applications.

If Storm staff knowingly encouraged or allowed incorrect information to be included on loan application forms then they were not only showing disregard for their clients, but they were also showing disregard for their business partners - the banks. If this is the case then that is behaviour that is unethical to both parties, and it appears to be greed driven behaviour.

But based on your comments, SICAG doesn't care about ethics either it would appear - its not about who is to blame, its about who has the money. Just get the money - thats all that was important to Storm, and thats all thats important to SICAG.

Greed without responsibility being repeated again.

Bunyip and Cuttlefish, you still make me laugh.. how many blogs is it going to take for you to understand that "blaming storm" or going after them will do nothing to save the homes of the storm investors currently fighting off the banks...As Dock said, let ASIC, Senate inquiry and the liquidators go after manny and storm, let SICAG concentrate on saving the lives of the investors who now have nothing...What purpose is served by SICAG "blaming storm" if ASIC have given so much money towards a public inquiry that will find out who is too blame. Let others worry about who is to blame...let SICAG go after a little bit of financial security for its members... Some people really have NO idea..

 

[specialed]

Maxie

I'm actually pretty good at smelling the roses....I smelled thousands of them last weekend at the Toowoomba Carnival Of Flowers!!

Seriously Max - most of us who have had any criticism of SICAG have also acknowledged the good work they've done in bringing the banks to the negotiating table and getting them to admit their failings in relation to Storm investors.
You already know this - so why keep harping on about smelling the roses?
And as for your 'woof woof' comments - better to leave them out - they only make you look childish.

Our criticism is simply that SICAG...

*endorse the Storm fees model on their website

*have people on the SICAG committee whose presence constitutes a conflict of interest

*have been noticeably silent in regard to revealing information about the dishonest and unscrupulous dealings of Storm Financial....information that could increase the likelihood of Storm principles and advisors facing criminal charges

Good on SICAG for working towards bringing the banks to account for any wrongs they may have committed.
But it wasn't just the banks who were at fault - any fool can see that Storm were also at fault. They deserve to be brought to justice just as much as the banks do....irrespective of the fact that there's virtually no chance of getting financial compensation from anyone in the former Storm Financial.
SICAG needs to recognise this fact, and work towards getting charges laid against all the appropriate people rather than focusing solely on the banks.

Tell me, why does SICAG need to concentrate on getting charges laid..you obviously have no understanding of SICAG or this whole mess. The banks have admitted some fault, and are starting a process of compensation...There are currently three inquiries, Senate, ASIC and Liquidators..The combined resources of which must be in th hundreds of millions. ASIC alone has giving how much ?? to the liquidators to understake a public inquiry, despite runing their own investigation at the same time...SICAG resources... a few volunteers fighting to save their own homes while at the same time serving as advocates and a support network for hundreds (if not thousands) who have lost everything.... If three inquiries cant identify where charges should be laid, what hope has a commitee, chaired by volunteers who are at the same time fighting to save their own homes got. Please, lets at least keep a sense intelligence about this forum...

 

[cuttlefish]

Bunyip and Cuttlefish, you still make me laugh.. how many blogs is it going to take for you to understand that "blaming storm" or going after them will do nothing to save the homes of the storm investors currently fighting off the banks...As Dock said, let ASIC, Senate inquiry and the liquidators go after manny and storm, let SICAG concentrate on saving the lives of the investors who now have nothing...What purpose is served by SICAG "blaming storm" if ASIC have given so much money towards a public inquiry that will find out who is too blame. Let others worry about who is to blame...let SICAG go after a little bit of financial security for its members... Some people really have NO idea..

specialed what will it take you to realise that banks aren't charity organisations but are privately run institutions owned by shareholders and weren't put on this earth to bail out people that acted irresponsibly (under the encouragement of their financial advisor) and took on debt levels that were unmanageable and risky - and it appears in many cases provided false or misleading information about their income and assets in order to obtain these debt levels.

For the component of this that is the banks fault - yes they should pay - but to just go after the banks 'because they have the money' is unethical.

I also doubt that those people that obtained these irresponsible debt levels using misleading information - had they made large profits instead of large losses - would have turned around and happily paid back the profits to the bank if the error had been brought to light by them.

Of course I have sympathy for the people that lost their homes and assets in this debacle, but that doesn't mean I support a blatant money grab from the banks. There are plenty of people that are victims of circumstance in life that lose their jobs, houses and assets and the banks aren't expected to bail them out either.

I still think a lot of Storm victims actually believe that the banks are the primary cause of their problems and really don't realise that this issue was primarily the result of Storm financials cr*p advice and complete lack of appropriate risk mitigation strategies, internal monitoring procedures and quality control.

 

[specialed]

Cuttlefish - a very good post.

One particularly relevant point you make is that investors have a responsibility to themselves for monitoring their investments and their debt servicing obligations.

So many people keep harping the point - why didn't anyone let me know I was in margin call?
The simple fact is that prudence should dictate that investors take defensive action well before they get anywhere near margin call.
This point appears to have been missed by most Storm investors.

What an idiotic comment...the evidence is now clearly showing (by CBA's admission in Sydney) that the data on the CGI website was inaccurate much of the time. How could Storm investors have monitored their inventments and taken "defensive action" when the data they had available was days out of date at a time when the market was droping by 400 points a day. If CBA and CGI cant "sell" and supply a product that works effectively then they shouldn't be able to sell it, or should be held accountable for its failure...