Australian (ASX) Stock Market Forum

Storm Financial Group

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Julia said:
I wouldn't be putting too much faith in ASIC. Their track record is less than impressive in any sense.

Their level of competence appears to be on a level with that of Victoria Police.
Click to expand...


Julia, ASIC may have had a couple of rough episodes lately but I truly hope that this doesn't affect their resolve to give an in-depth treatment of the whole Storm saga.

I saw Mr Upton in The Mall a couple of weeks ago. He certainly does look focused and I'm sure I noticed that little spring in his step I previously observed after those eventful days at Harry's.
 
Julia said:
I wouldn't be putting too much faith in ASIC. Their track record is less than impressive in any sense.

Their level of competence appears to be on a level with that of Victoria Police.
Click to expand...

Also Julia, The AFR is reporting ASIC Chief
"Tony D'Aloisio, is expected to come under fire from a Senate estimates committee tonight, amid claims of pay disputes, staff resignations and budget blow-outs." Let's hope there is a new momentum now and any hindrances to their effectiveness is behind them.
 
Julia said:
I wouldn't be putting too much faith in ASIC. Their track record is less than impressive in any sense.

Their level of competence appears to be on a level with that of Victoria Police.
Click to expand...

The Australian Parliament created ASIC in 1998, and it became operational in 1999. Since its inception, it has drawn much criticism for its retroactive approach - and its for its incompetence. In January 2006, The Auditor General criticised it for its inability to implement an AFSL licencing system. It again criticised it in January 2007 for its abysmal prosecution rate per complaint. Perhaps Neal Prior, the current editor of the West Australian, once best described its time of existence as a "reign of error".

A short list of the larger companies in which it has failed to act in time over the years include HIH, One-Tel, Sons of Gwalia, Harris Scarfe, Westpoint, ACR and Fincorp Then there are those of a smaller size. Hey include Business Capital Australia, Gabriel Pennicott, National Investment Institute, Radison Maine, Robert Orehek, Sonntag, Streetwise, Tasmanian Mortgage Scams, Triscott, Qual Corp, Hanna Bros, Viron Hondros, Pagoda Edward Elecom, and Henry Kaye. In more recent times we have seen the collapses of Westpoint, ACR, Fincorp, Bridgecorp, and more recently Storm. In all of those there were clear warning for ASIC to investigate and take immediate action. That list is anything but exhaustive, and does not include small companies. Nor does it include recent stockmarket failures.

http://www.westpointinvestorsgroup.com/
 
"Storm investors, CBA may be nearing agreement"

"Hopes are growing of a breakthrough in the negotiations between former investors in failed adviser Storm Financial and an independent negotiation team set up by Commonwealth Bank of Australia."

Read more on page 4 of The Australian Financial Review, Feb 12, 2010.
 
Kevin07 you said on the 30 January that you went to a financial advisor and you knew and understood what he was suggesting. That's exactly what didn't happen at storm, in most cases quite the reverse in fact. I see that as a major difference and don't think that your comments are at all fair. Elderly people of retirement age, one lady was 91 years of age, were given large loans by both banks involved in her case.

She was on the pension. Few if any of these people had any idea and many of storms advisors made sure that those who didn't understand, were made none the wiser. The biggest mistake that many of us made was to say 'we've never been to a financial advisor before and dont' know anything about investing.' They must have rubbed their hands together in glee.

Most of us thought that, that's why you went to an advisor, to get advice if you were lacking investment knowledge. Now after the event we find out that you should stay well away from any of them unless you have a considerable high level of understanding in the financial field. There are a lot of differences between your case and the storm case. Also your age makes a huge difference, a considerable percentage of storm clients were retired or on the verge of retirement and the storm/banks combination have destroyed the lives of several thousand families with their irresponsible advice and lending.

Not all ex storm clients were unknowledgeable investmentwise, some, like you understood what they were investing in then and would do it again, they liked this type of investment and could afford it, because of age and earnings, and I defend anyone's right to agree or disagree with this type of investment. What many of you have to realise is that a large number of clients asked for a safe/secure investment plan and were told by the advisors that what they were advising was safe and secure. When an advisor with a degree tells you this and you don't know any different it's easy to see why many believed them.

It's all too easy for those of you, with a fair degree of investment know how, on this forum to say 'you must have known it' wasn't safe...not true. Oh we know that now alright but we didn't then and we believed the lies, they were told by the experts. We can only hope that the truth comes out as time goes on and investigations continue.

Kevin07 you have only lost money, most storm clients have lost their ability to live a normal life, they are on antidepressants, they have lost the ability to enjoy their lives, they've lost their homes and property and all their money, everything, it's a heavy price to pay for seeking financial advice...and they are not all 35 years of age. You've learnt your lesson and can come back stronger in the next 30 years before you retire, they can't.
 
"Stormy weather, but hopes rising"

"HUNDREDS of victims from the Rockhampton region, who lost millions of dollars when the investment adviser Storm Financial collapsed with huge debts, could know by the end of the month how much they will get back."

More by Adrian Taylor in The Morning Bulletin here;

http://bit.ly/9QPj4E
 
"Macquarie decision momentous: Storm founder
Consequences for all clients"

"Former clients of Storm Financial may benefit from the Macquarie Bank and Leverage Equities margin lending case, Storm co-founder claims.

"The case is monumental and it has ramifications, we believe, for every single Storm client," Storm co-founder Emmanuel Cassimatis said."

More by Kate Kachor in Investor Daily here;

http://www.investordaily.com.au/cps/rde/xchg/id/style/8538.htm
 
"Slater & Gordon, has posted a 12.1 per cent rise in half year earnings."

"a "significant proportion" of the company's commercial litigation resources have been assigned to the Storm action"

More on thenewlawyer.com.au
 
"Buyer Beware: Margin lending is back in vogue"

"Before the Global Financial Crisis, margin lending had well and truly become the new wealth creation vehicle of choice. It was widely regarded as an infallible tool of leverage using someone else’s money, multiplying the upside of share trading and setting out to get more from investing less.....

During the Storm Financial inquiry I heard sickening stories of disaster and loss......"


Full text here by Bernie Ripoll federal member for Oxley and the chairman of the Joint Parliamentary Committee on Corporations and Financial Services;

http://www.labor.com.au/buyer-beware-margin-lending-back-vogue
 
Solly said:
"Buyer Beware: Margin lending is back in vogue"

"Before the Global Financial Crisis, margin lending had well and truly become the new wealth creation vehicle of choice. It was widely regarded as an infallible tool of leverage using someone else’s money, multiplying the upside of share trading and setting out to get more from investing less.....

During the Storm Financial inquiry I heard sickening stories of disaster and loss......"


Full text here by Bernie Ripoll federal member for Oxley and the chairman of the Joint Parliamentary Committee on Corporations and Financial Services;

http://www.labor.com.au/buyer-beware-margin-lending-back-vogue
Click to expand...

Solly - that's an excellent article and it sums up Cassamatis and the entire Storm situation to a tee.

Now we're reading words like 'BEWARE' in relation to margin lending. The fact is that caution was always needed when using margin loans for stockmarket investment. But Cassamatis, the big investment expert, didn't seem to know it. Neither did many Storm clients, apparently.
Many people, including Storm clients, did exceptionally well using margin loans to increase their market exposure during the bull market.

They kept their profits if they understood that bear markets are a feature of stockmarkets, as are bull markets, and you'd better not stick with a margin loan once the market turns bearish.

They lost their profits if they failed to remember the bear markets of the past, and took no action once the market turned bearish and the margin loans magnified their losses.

There's no disputing that Cassamatis made a lot of money for his clients.
It's just a shame that he was incompetent when it came to giving advice that would have enabled Storm clients to hold on to most of their profits.

Amongst all the blame being levelled at the banks for lending people too much money and selling their investments out from under them etc, the heat seems to have gone off Cassamatis, which is no doubt what he wanted to happen.

But let's remember that Cassamatis and his salesmen gave the advice to his clients, he made the decisions that were implemented by his sales staff, he organised the margin loans, he failed to take defensive action to protect his clients wealth as he should have done long before they got anywhere near margin call, he sat on his hands and watched for a whole year while one of the worst bear markets in history wiped away his clients wealth.

Let it not be forgotten by Storm clients, SICAG or anyone else who has been affected by the Storm debacle.....Cassamatis was the primary cause of the financial disaster that befell Storm clients.
 
Was he completely incompetent though? I think he was extremely cunning, over a number of years. He built up a business from scratch using other people's money, traded on reputable Advisors reputations by buying them out to add to the Storm 'family' and hoodwinked even the Banks - up to a point. Even they wouldn't support his floating Storm as a viable entity. When that failed, and the market started to fall, it was never in Cassimatis interest to protect his clients, after all, he would be losing his income. Clients were unable to take their money out of the market, as testified by some of their advisors and former clients... and were often urged to borrow more which placed them in a precarious position regarding their leverage, even before the proverbial hit the fan. Secret deails with the Banks to allow gearing at a higher percentage than normal was the final nail in the coffin, and sure, there probably was some back room back slapping going on and Cassimatis thought they wouldn't let us all go down the tube.

I think he was outsmarted. In the end, there was just too tempting an opportunity there for someone - a flood on cheap shares just waiting to be scooped up when the Storm people were sold down. And only 3,000 or so people to suffer, mainly retirees and Mums and Dads... what would they know
anyway.

ASIC... c'mon.
 
It's often said the sharemarket runs on greed and fear.

Then:
Cassimatis was greedy - for money, certainly, but also ego-driven greed for power/glory/recognition.

Banks were greedy - lend more, stretch lvr maximums, reduce fees, fund events - whatever it took to get their share of the storm referred business and meet their lending targets.

Clients were greedy - at least in the eyes of the general public - I think some were and some weren't - but aren't all investors by definition wanting to grow their wealth? How much is enough? Where's the cut-off between prudence and greed - it's a shifting line in the sand that moves according to circumstances and sentiment I feel.

Now:
Cassimatis should fear - losing his fortune, reputation and maybe even freedom for a while? Should certainly fear meeting some ex-clients face-to-face. If there is such a thing as karma (and I like to think there is) he should certainly feel some fear..

Banks fear - having to acknowledge some responsibility, having to endure more scrutiny perhaps in the future, having to pay compensation. Several bank employees obviously had cause to fear keeping their jobs, being able to secure new ones, maybe a few even fear looking at themselves in the mirror?

Ex-clients fear - so much. Fear of keeping the home, fear of facing family, fear of ever climbing out of the hell their lives have become in many cases. Fear of failure, fear of accepting responsibility, fear of trusting anyone ever again, fear of overcoming huge debt, fear of kissing goodbye forever their dreams of the future.

Greed and Fear. Sometimes the more things change, the more they stay the same.
 

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