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Storm Financial Group

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" 'Gambling mentality' ruled at Storm "

"Failed advisory firm Storm Financial was warned in early October that more than 700 clients were in margin call territory - or negative equity - with a shortfall of $27 million, according to Commonwealth Bank of Australia."

Read more by Michelle Singer in the The Australian Financial Review of October 27 2009
 
Solly said:
"Storm Financial 'gambled' on rally: Federal Court"

"STORM Financial head Emmanuel Cassimatis had a "perpetual gambling mentality" and believed the Commonwealth Bank hatched a "conspiracy" to bring down his advisory firm, a Federal Court in Brisbane was told yesterday."

More by Anthony Marx in The Courier Mail here;

http://www.news.com.au/couriermail/story/0,23739,26263874-3102,00.html
Click to expand...

Some interesting comments from this article

----------
John Clothier, distribution head with the bank's Colonial Geared Investments, told an inquiry into Storm's collapse that Mr Cassimatis had agreed to sell down $700 million worth of client funds last October after they fell into margin call.

But when the market staged a brief rally, Mr Cassimatis sought to stop the second part of the sale because he wanted to gamble that clients might recover, the court heard.

... etc ...

Mr Clothier said that Storm was informed with dozens of emails and phone calls that the number of its clients in margin call had blown out from 98 to 710 by October 5.

Mr Clothier said that eventually CGI came to the conclusion that it could not "rely upon and trust resolutions" proposed by Storm, which had many clients who had been in negative equity for six weeks or more.
---------


Thats pretty damaging ... and very much sounds like someone not operating to any kind of plan. From this it sounds very much like Storm were well aware that many of their clients were already in margin call but were running on a mixture of panic and hope, and flailing about indecisively. The headless chook approach to crisis management. (I'm well versed in this approach as I use it myself quite regularly ;):D ... but luckily I'm not managing thousands of peoples financial futures :eek:).

In all serious - with the level of gearing and risk that they prescribed, it is quite astounding that there was a complete lack of any kind of plan for what they would do in the event of a serious unravelling to the downside. It is not as though they hadn't had some forewarning, given the depth and extent of the crisis that had already occurred in the prior 8 months or so.

If they were going to continue to gamble on a bounce they could at the very least have implemented some kind of derivatives based downside protection - but to ignore the initial margin calls and 'hope' to win it back is like a novice investor/trader ignoring their stops - and its exactly the sort of behaviour that contributes to the final capitulation phase of a down trend. Sounds very amateurish to me.

I'm also suprised, given the level of gearing they were recommending their clients take to invest into the index fund, and that it was a Storm branded fund, that the index fund itself wasn't set up in such a way as to incorporate hedge protections against market volatility (and maybe it did but wasn't enough but it doesn't sound like it).
 
cuttlefish said:
Some interesting comments from this article

----------
John Clothier, distribution head with the bank's Colonial Geared Investments, told an inquiry into Storm's collapse that Mr Cassimatis had agreed to sell down $700 million worth of client funds last October after they fell into margin call.

But when the market staged a brief rally, Mr Cassimatis sought to stop the second part of the sale because he wanted to gamble that clients might recover, the court heard.

... etc ...

Mr Clothier said that Storm was informed with dozens of emails and phone calls that the number of its clients in margin call had blown out from 98 to 710 by October 5.

Mr Clothier said that eventually CGI came to the conclusion that it could not "rely upon and trust resolutions" proposed by Storm, which had many clients who had been in negative equity for six weeks or more.
---------


Thats pretty damaging ... and very much sounds like someone not operating to any kind of plan. From this it sounds very much like Storm were well aware that many of their clients were already in margin call but were running on a mixture of panic and hope, and flailing about indecisively. The headless chook approach to crisis management. (I'm well versed in this approach as I use it myself quite regularly ;):D ... but luckily I'm not managing thousands of peoples financial futures :eek:).

In all serious - with the level of gearing and risk that they prescribed, it is quite astounding that there was a complete lack of any kind of plan for what they would do in the event of a serious unravelling to the downside. It is not as though they hadn't had some forewarning, given the depth and extent of the crisis that had already occurred in the prior 8 months or so.

If they were going to continue to gamble on a bounce they could at the very least have implemented some kind of derivatives based downside protection - but to ignore the initial margin calls and 'hope' to win it back is like a novice investor/trader ignoring their stops - and its exactly the sort of behaviour that contributes to the final capitulation phase of a down trend. Sounds very amateurish to me.

I'm also suprised, given the level of gearing they were recommending their clients take to invest into the index fund, and that it was a Storm branded fund, that the index fund itself wasn't set up in such a way as to incorporate hedge protections against market volatility (and maybe it did but wasn't enough but it doesn't sound like it).
Click to expand...

The index funds I was invested in were with Challenger, although storm branded, and managed by Challenger, and did not involve any hedging. The amateurish flailing about approach based on panic and hope sounds about right, not what one expected from a so-called professional. My reading of the market commentary periodically put up on storms website before their demise gives me the impression that manny firmly believed our sharemarket would be supported by China and would/should be immune to the sub-prime problems in USA as our banking system was so much stronger than theirs. He did not believe that the problems in USA should affect us to the extent that they did - therefore in his mind it wouldn't happen - I believe the man's ego prevented him from contemplating what may happen should he be wrong.

I found it very interesting that the article quoted above states that manny had a plan for the cba to save his business and his top 200 clients - presumably the rest of us were to be cast adrift! I guess those top 200 clients were also the ones that received under-the-table loans to bail them out towards the end. I guess that's one way to ensure future loyalty from those you see as being worth most to you - and #### the rest.
 
Julia said:
Out too Soon, do you mean Manny has changed his personal name, or that he has had various business names for his various enterprises?

Good to know you didn't provide fodder for him.
Click to expand...

Sorry i wasn't monitoring this Julia :eek:
The business seemed to change names with the weather until they finally stuck on the all too appropriate "Storm" :rolleyes:
I forget the name they used when the "dotcom" bubble burst but that was when the name changing first caught my eye :cautious:
(& it was "Manny" all along) We got quite used to his face on TV ads up here :)
 
Out Too Soon said:
Sorry i wasn't monitoring this Julia :eek:
The business seemed to change names with the weather until they finally stuck on the all too appropriate "Storm" :rolleyes:
I forget the name they used when the "dotcom" bubble burst but that was when the name changing first caught my eye :cautious:
(& it was "Manny" all along) We got quite used to his face on TV ads up here :)
Click to expand...

Ozdaq Securities was one of them, I believe it was around the dotcom period!
 
Solly said:
" 'Gambling mentality' ruled at Storm "

"Failed advisory firm Storm Financial was warned in early October that more than 700 clients were in margin call territory - or negative equity - with a shortfall of $27 million, according to Commonwealth Bank of Australia."

Read more by Michelle Singer in the The Australian Financial Review of October 27 2009
Click to expand...

So the CBA new in early October that some of their clients, who they had a contractual agreement with were entering margin call territory but chose not to contact those clients. Instead preferring to go through a third party, which could only have the effect of drawing out the time it would take to rectify the situation.
 
Storm knew at the same time, if not earlier. Manny instructed staff to do nothing while he tried tot alk his way out of it to protect his profits.
 
I believe there were some very interesting responses from Mr Arnaout at today's examination.

It also appears that Register Baldwin is not very tolerant of vagueness in her court.

I am eager to see tomorrow's press I'm confident that it will be a good read.
 
Solly said:
I believe there were some very interesting responses from Mr Arnaout at today's examination.

It also appears that Register Baldwin is not very tolerant of vagueness in her court.

I am eager to see tomorrow's press I'm confident that it will be a good read.
Click to expand...

Aaaaah you're killing me Solly!!! I want to know now!
 
The SICAG model site, sicag.info is looking very sparse.

Very little new information, unsurprising as its mostly adverse reporting about The Cassimatises, and the Storm model, in the msm and on asf.

I think the money spider has been stealing all the type.

The disclaimer about the Cassimatises will be last on the moneyspider's menu.

gg
 
specialed said:
So the CBA new in early October that some of their clients, who they had a contractual agreement with were entering margin call territory but chose not to contact those clients. Instead preferring to go through a third party, which could only have the effect of drawing out the time it would take to rectify the situation.
Click to expand...
There have been varying accounts about this. If Storm clients specifically signed over to Storm as their agents, then obviously the Bank would contact Storm in the event of a margin call, not the client. This appears to have been what happened in most cases, the problem then being that Storm failed to take the appropriate action.
Someone will correct me if I've misunderstood this.


Solly said:
I believe there were some very interesting responses from Mr Arnaout at today's examination.

It also appears that Register Baldwin is not very tolerant of vagueness in her court.

I am eager to see tomorrow's press I'm confident that it will be a good read.
Click to expand...
Are we to gather that you were there? If so, couldn't you give a brief rundown of what happened?

Out Too Soon said:
Sorry i wasn't monitoring this Julia :eek:
The business seemed to change names with the weather until they finally stuck on the all too appropriate "Storm" :rolleyes:
I forget the name they used when the "dotcom" bubble burst but that was when the name changing first caught my eye :cautious:
(& it was "Manny" all along) We got quite used to his face on TV ads up here :)
Click to expand...
OK. Thanks for that, Out Too Soon.
 
Out Too Soon said:
Sorry i wasn't monitoring this Julia :eek:
The business seemed to change names with the weather until they finally stuck on the all too appropriate "Storm" :rolleyes:
I forget the name they used when the "dotcom" bubble burst but that was when the name changing first caught my eye :cautious:
(& it was "Manny" all along) We got quite used to his face on TV ads up here :)
Click to expand...

OTS, they called themselves OZDAQ, an attempt to steal the kudos of NASDAQ.

A few expensive lawyers letters made Manny tear up all his letterheads and go back to some other bull**** name like ****forbrains and finally Storm.

gg
 
Julia said:
Are we to gather that you were there? If so, couldn't you give a brief rundown of what happened?
Click to expand...

Maybe we already get a brief rundown by Solly of the previous days events each morning ... or am I reading too much in that wink in his post three above (and in an earlier post.). :confused:
 
Julia said:
Are we to gather that you were there? If so, couldn't you give a brief rundown of what happened?
Click to expand...

Sorry Julia, I'm too far away but I do get little snippets sent to me occasionally. The transcripts will be very, very interesting.
 

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