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Well, obviously I am naive in imagining no borrower would engage in a loan when they had not seen the valuation attributed to the property by the lender or the income attributed to the borrower.


Clearly, you yourself would never do anything similar again. My comment was not directed personally toward you, DocK. I have, however, read many comments from Stormers who still believe there was nothing wrong with the double gearing strategy, and that their demise is entirely the fault of the banks. That is what I was referring to and I stand by my comment.

And let's remember that plenty of people have been done over by shonky advice or operators and have never received any compensation at all.

Some many years ago I had an investment with a solicitor's private mortgage scheme into which I put my then available capital. ( I would never borrow against my home to invest into anything but this was money in the bank at a low interest rate.)
The mortgage investment interest rate was 2.5% higher than term deposit rates at the time, so not excessively higher and into the 'too good to be true' category.
The solicitor checked out. He had been running this scheme for several years with no complaints or problems.
Full valuations were submitted to investors from a registered valuer, and the LVR did not exceed 60%.
I had friends who had been happily investing here for three years and had received the monthly interest on time, and the capital refunded at the completion of each project.
On the basis of all the above, I sent off my money for investment into a specific project, the details of which I'd examined carefully.

All went well for some months, and then the interest payments stopped.
It pains me too much to describe the excuses offered etc from that point.

ASIC became involved and they appointed Worrells to investigate.
Worrells spun their investigation out over many months, selling the various properties at market value in the process.

It turned out that the registered valuations were inflated by more than 50% and much of the detail provided by the solicitor regarding the work being done on the properties was pure fantasy.

Who paid Worrells for their work? Well, the investors, of course.
At the end, all the investors lost all their capital, and received none of the due interest payments, such were the charges from Worrells.

The solicitor and the valuer were duly prosecuted but that didn't bring any compensation to any investors, none of whom had been irresponsible, or reckless in any way.

So forgive my view that Stormers are being quite fortunate in receiving compensation from anyone.
 
"CBA Storm admission ‘monumental’"

"Storm Financial founder and former chief executive Emmanuel Cassimatis yesterday said Commonwealth Bank of Australia should be preparing to pay investors $2 billion compensation, 10 times initial estimates of its liability."

Read more by Duncan Hughes in the Australian Financial Review Feb 25 2010.
 
In that case, let them reject the offer and take it to the Courts.
Maybe after footing the bill for that, they will take a different view.

Julia, I wonder if a company such as IMF could arrange funding if a class action does actually come to fruition.
 
Does anybody have any feedback, that they are willing to share, from the S&G meeting in Cairns last night?
 
In that case, let them reject the offer and take it to the Courts.
Maybe after footing the bill for that, they will take a different view.

Julia, Perhaps reading the posts a little more clearly would make you realise that investors will not be footing the bill if there is a class action persued - litigation companies will take that up. Litigation companies donts foot bills unless they believe a good case is at hand.
 

Julie,

This comment appears on face value to indicate that much of what seemed like a general animosity towards the storm clients (victims) by you is based more on the fact that you were unable to get compensation for your failed investment decisions, rather then a genuine understanding of the role a number of the parties and in particular the role of the CBA played in this affair.

The basis for the compensation is an admission of some culpability in this affair. Further, as the compensation is based on 6 “test cases” bought before some highly respected legal experts, The decision to offer compensation is a reflection of the CBA's belief that the legal interpretation in these test cases is correct. This is after the CBA would have also gotten their own legal advice. Surely they therefore believe that if it were to go to court they risk losing substantially more than the current estimate of $ 300 million. A few cases here and there will ultimately cost them a lot less then a class action involving 2000 odd people, should they lose.

I hope some do “take it to the courts”, and some have indicated they will be. Although there is a risk it may well be locked in the legal system for some time I believe this needs to be tested in actual court, not just in a hypothetical one....

However, I doubt even this will change your opinion, that unfortunately appears to be quite dogmatic and not always based on an objective analysis...
 
It's Julia.

I have no 'animosity' toward any Storm clients. Just disbelief that so many people would engage in such risky investing at such a late stage in their lives, e.g. double gearing.
Much has been lamented about the possibility of people losing their homes.
Well, why put them at risk in the first place? Not to mention then borrowing further against that loan to buy more shares!!

If the banks have been less than professional in their lending criteria, then of course they should make amends.

I was simply making the point that there are thousands of other people over decades who, despite not taking the obvious risks that Storm clients took, have been victims of criminal behaviour, and who did not have the benefit of a huge media interest to spur class action and taxpayer funded investigations.

It just seems to me that there is one remedy for those involved in the big failures, and none for those whose loss has been only as part of a much smaller operation.
 
" 'Truth is coming out', Storm founders claim"

"STORM Financial founders Emmanuel and Julie Cassimatis are still living with the hope they will be absolved of blame in the collapse of the financial planning empire and the ruin of its former clients."

More by Tony Raggatt in the Townsville Bulletin here;

(Also contains clarification of the University of Western Sydney "Master of Applied Finance")

http://www.townsvillebulletin.com.au/article/2010/02/26/118435_news.html
 
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