Storm Financial Group

[TheAbyss]

can see the court case:

Lawyer to Victim: So the bank lent you money that they shouldn't have?
Victim: Yes
How much did they lend you?
Victim: I don't know exactly, about $XXX
Lawyer: Did you sign this document that states the amount that the bank lent you?
Victim: Yes
Lawyer : If you had of made a large profit would you give some money back to the Banks?
Investor: errr No why should I?
Lawyer : What would have done if you made a profit?
Investor: Give some to my kids, buy a new car, pay off the house, play the Pokies.

How did you get to be so cynical Glen? Try this.

40 year old share investing son (lets call him Glen) to parents, why did you give them your money to invest you know i could have told you what to do?

Parent, Beryl at the cent auction said that they were really good and if i didnt do something i would be eating dog food when i retire as the government canned pensions. Plus you always tell me how busy you are and that i should have a portfolio, whatever that means.

Glen, But didnt you realise they said your house was worth more than it really was and your job paid less than they said?

Parent, Yes but they said that was what they had to do to ensure the paperwork flowed smoothly and that they would look after it all for me.

Glen, But they borrowed squillions which now you have to pay back!

Parent, how was i to know? All i knew was i paid money each month and they said i would be able to retire with dignity.

Not all are after a quick buck Glen42, most of these people were probably just after a secure retirement with a few luxuries after decades of toil. Cut them some slack unless you know better.

I am not a storm investor and do not know any but i do know my mother would have walked straight into something like this if her luck was out.

 

[Julia]

Hi Julia,

see attached, $100,000 is the quoted figure

http://www.theage.com.au/news/busin...-under-scrutiny/2007/03/19/1174152976959.html

Hi Awg, Thank you for that.
So that's the amount payable via FICS. I'd have thought, though, that planners would have quite separate personal Prof. Indemnity Insurance through an insurance company, just as, say, doctors do.
Earlier in this thread an IT consultant said he/she had to carry a significant insurance.

Sir O: I've previously asked if you could comment on this?

FWIW, I think ASIC will want to make an example of the Storm principles, if they have breached ANY regs, cause they have made ASIC look incompetent.

Hmm, making ASIC look incompetent is not hard.

 

[nomore4s]

Not all are after a quick buck Glen42, most of these people were probably just after a secure retirement with a few luxuries after decades of toil. Cut them some slack unless you know better.

I am not a storm investor and do not know any but i do know my mother would have walked straight into something like this if her luck was out.

Abyss, that's fair enough but he does have a point, if the bull run had continued and they made money the clients would be praising the FP.

It's a lesson to all - don't blindly follow advice from anyone and understand the risks.

 

[Julia]

With apologies for interrupting the discussion, could posters who want to quote a previous post please do it using the QUOTE tags as Joe has directed, so it appears clear which is the previously posted quote and which are your own remarks. Here is the thread with how to use the QUOTE tags.

https://www.aussiestockforums.com/forums/showthread.php?t=2737

A mistake I made when first using these was not realising that the initial QUOTE is different from the final one, i.e. the final one has a '/' inserted.


And if anyone is copying and pasting, no need to do that, just click on the REPLY button at the bottom right of the post you want to quote.

If you want to quote more than one post, first click on the MULTIQUOTE
button for any post(s) then that button plus the QUOTE button on the final post you are quoting. They will all appear and you can insert your comments in between them.

Sorry if I seem picky, but it's sometimes difficult to sort out from some posts which part is quoting someone else and which part constitutes your own words.

 

[awg]

Hi Awg, Thank you for that.
So that's the amount payable via FICS. I'd have thought, though, that planners would have quite separate personal Prof. Indemnity Insurance through an insurance company, just as, say, doctors do.
Earlier in this thread an IT consultant said he/she had to carry a significant insurance.

Sir O: I've previously asked if you could comment on this?

That sort of Professional Indemnity Insurance has limited liability as well.

Typically $5-20million. ( the insurance Co wont take on unlimited liability)

I would be fairly sure that conditions of payout would limited as well

 

[Julia]

I can't believe the gall of the advisers, particularly the principals who "GAMBLED" on their businesses in the big roll up to the mothership prior to the float - and now, the principles are crying foul and demanding payment for their businesses... I can tell you for a fact they did so on the proviso that the payout would happen when Storm floated and they all had stars in their eyes - They were quoting multiples in the 15-17's for their shareholdings, and had openly discussed that if the float didn't happen straight away, they'd bide their time until it did.

When you refer to "the principals" here, do you mean the previously independent small FP's who sold to Storm?

 

[Julia]

That sort of Professional Indemnity Insurance has limited liability as well.

Typically $5-20million. ( the insurance Co wont take on unlimited liability)

Per client, or in total, awg, do you know?

I would be fairly sure that conditions of payout would limited as well

You'd have to think so, which is why I suggested earlier that 'negligence' would quite likely not be an acceptable criteria to an insurance company.

 

[Julia]

Hello Carey,
Many thanks for your useful comments.

Hi

I know there has been a wide range of comments on this forum about lawyers (and how useful they will be) but the reality is that in most of the cases i have seen these storm clients do have grounds for legal recourse against several banks. When u provide credit for both home loans and margin loans there are very strict rules and procedures that must be adhered to by the banks.

So action taken against the banks is more likely to be because they have failed to adhere to these rules than because they have loaned inappropriate amounts on the initial equity loan? Or failed to check income declarations?

1. Contact your home and margin loan providers and request copies of the actual loan application forms and associated consumer credit contract schedules - they must give them to u so be firm. It may take a few days for u to receive these documents.

Wouldn't it have been routine for clients to have had all this documentation at the time of the loan being granted?

2. Review the asset, liabilities and personal income details contained in the loan applications - look for irregularities such as: is your declared income correct or has it been overstated?

Wouldn't this have been checked by the client before the loan application went in? If not, then it seems you're suggesting Storm may have altered these details.

 

[awg]

Per client, or in total, awg, do you know?


You'd have to think so, which is why I suggested earlier that 'negligence' would quite likely not be an acceptable criteria to an insurance company.

I am almost certain that Storm "losers" would not be able to look towards the insurance companies, UNLESS gross negligence of some kind was done by individuals,(theft, fraud), on a case by case basis.

Insurance Companies dont stay in business by taking on excessive risk

Also most "small" companies only buy as much as they realistically think they need, due to premium cost.

In my experience, the regular policy is for $10 million TOTAL.

If you want more, like a mid-size Co, you would have to negotiate an individual contract with the IC.

I seriously doubt that an Insurance Company would allow cover for poor stock market advice losing multi-millions, they would have clauses protecting themselves.

 

[Julia]

I am almost certain that Storm "losers" would not be able to look towards the insurance companies, UNLESS gross negligence of some kind was done by individuals,(theft, fraud), on a case by case basis.

Insurance Companies dont stay in business by taking on excessive risk

Also most "small" companies only buy as much as they realistically think they need, due to premium cost.

In my experience, the regular policy is for $10 million TOTAL.

If you want more, like a mid-size Co, you would have to negotiate an individual contract with the IC.

I seriously doubt that an Insurance Company would allow cover for poor stock market advice losing multi-millions, they would have clauses protecting themselves.

Yep, you're echoing my thoughts on this.

 

[Julia]

The following comment from Mr Scattini is taken from the news item link for which is currently on ASF Home Page:

Mr Scattini said the collapse was brought about by "the greed of Storm and the banks".

He said Storm Financial investors were given bad advice by banks that should have known better

Isn't it Storm who were providing the advice? What 'advice' did the banks give? Presumably this is the start of Mr Scattini attempting to focus blame on the only likely source of money.

 

[stormedup]

1) Why were storm, and the advisors so reluctant to sell under investors instruction? I myself, and have heard from many people that when the instcruction was given to sell that it was refused. Why? If I had suffered a 10-20% loss and felt it time to get out why were we held in against our wishes? I was held in up to around 102%.

The majority of staff was asking that same question and the majority of staff were kept in the dark. Only the Cassimatis’, Storm’s financial advisors and their senior staff could answer that.

Some staffroom conversation suggests that:

Storm thought that it could just convert to cash the $2.5billion of client’s investments in the “Storm Badged Indexed Funds” at their instant demand. (The consequences of dropping $2.5b was irrelevant), Colonial and Challenger didn’t see it that way.

It seemed to be common knowledge around the offices that Storm advised Colonial not to sell down when clients went into margin call. When things turned nasty, those very same senior staff denied this and claimed the opposite.

Storm thought that CBA/Colonial would tide them over, leaving clients in margin call until the market improved. (Mr & Mrs Cassimatis and their senior staff are notorious for their arrogance and assumed dominance over all associated parties (including Colonial and Challenger as well as any other bank/margin lender that wanted a piece of the action).

It would be reasonable to believe Colonial’s claim that Storm were advised daily of their client’s situations. (I think I read that somewhere). All staff had access to the Colonial website. After logging on, the very first information available showed the exact number of clients in margin call, the number in buffer zone and the number close to buffer zone. This was consistently showing at around 600 to 700 clients in margin call.

Storm did not want the cash that clients held used to pay off their margin loans. If the cash was used up there would be no funds available “to buy back in”. That meant no future income, (commission, fees, trails etc) for Storm.

This may make some sense to the more investor savvy among you.
​

2) How and where did the last 2 dividends that were drwan by emanuel come from? maybe this is the obvious, but are you telling me, he took dividends/commisions on margin loans and empty portfolios from failed investors? I mean where did the 24mill in the last 6months come from..

My apologies, the $24m was from the 2008 year. Still collected a million dollar salary though, and flew themselves and family around in their jet while claiming they were suffering too.​

 

[daisy]

Can I ask a really stupid question here?
When people wanted to get money out of Storm they clearly had a battle on their hands. Some managed to win the battle some didn't. O.K.

But if this money that people were building up in the market during the good times (forget the last year or so) was meant to be retirement income and you had to fight to get it out then what was the actual plan to release funds for retirement.?

 

[Duckyt]

In support of stormedup - another ex-employee - I should also assure everyone of the arrogance of this couple. From their on-going behaviour - it was obvious they didn't believe 'laws' applied to them - check out the last two highly publicised court battles - with the Federated Clerks Union back in the early 1990's through to the Ozdaq name debacle. Staff meetings back in the old days was that Emmanuel would make a great politiican and be able to reshape Australia !! I'm talking visions of making it to the top job!

Another interesting thought - the strategy that started it all back in the 1990s when it was just them (no tertiary degree between them) ? so was it flawed from the start ? It seemed full-steam ahead and get the qualifications later. It just made me laugh when I checked out the website and both Julie, Emmanuel, Stuart & Bernardine were all being touted as the wonderful highly tertiary educated professionals - certainly didn't start out that way. Let's also just say, I wouldn't be surpised if there are claims made of forging signatures !!!

That the new allegations of oxygen & listening devices wouldn't raise my eyebrows - it would also appear to be staying true to their character.

I hope that they get their just desserts - but - also I'm not holding my breath. But I am a big believer in karma and this collapse (due to his arrogance) will hopefully act as some sort of moral wake up call ! Remains to be seen.

 

[awg]

[]


Storm thought that it could just convert to cash the $2.5billion of client’s investments in the “Storm Badged Indexed Funds” at their instant demand. (The consequences of dropping $2.5b was irrelevant), Colonial and Challenger didn’t see it that way.

It seemed to be common knowledge around the offices that Storm advised Colonial not to sell down when clients went into margin call. When things turned nasty, those very same senior staff denied this and claimed the opposite.

Storm thought that CBA/Colonial would tide them over, leaving clients in margin call until the market improved. (Mr & Mrs Cassimatis and their senior staff are notorious for their arrogance and assumed dominance over all associated parties (including Colonial and Challenger as well as any other bank/margin lender that wanted a piece of the action).

It would be reasonable to believe Colonial’s claim that Storm were advised daily of their client’s situations. (I think I read that somewhere). All staff had access to the Colonial website. After logging on, the very first information available showed the exact number of clients in margin call, the number in buffer zone and the number close to buffer zone. This was consistently showing at around 600 to 700 clients in margin call.

Storm did not want the cash that clients held used to pay off their margin loans. If the cash was used up there would be no funds available “to buy back in”. That meant no future income, (commission, fees, trails etc) for Storm.

This may make some sense to the more investor savvy among you.
[/COLOR][/INDENT]

One thing you can be ABSOLUTELY certain.

Colonial etc would have email AND digital tape recordings of all their recent correspondence with Storm.

plus top notch legal advice.

the decision making ****-ups would mainly be down to Storm.

that will come out when that corro is released in court.

Storm could have issued instructions to Colonial to sell down or even liquidate.

As for the 24 hours notice of corporate loan withdrawal by CBA, happens all the time, especially when they realize their security is compromised

 

[basilio]

I think that what has happened with Storm is just the more extreme example of most of the financial planning and for profit investment companies which have developed in the last 20 years.

The theory is that these organisations are developing strategies to help us, the public, save for the future. The savings plans, investment analysis and so are theoretically for our benefit....

The reality is that the system is in place for the companies and the most effective employees. Full Stop. End of story.

The entry fees, exit fees, management fees, trailing commissions and so on ensure that at the end of the day much of any surplus generated has gone as profit or costs ( salesman's wages.)

Storm was simply a turbo charged version of this process.

The clearest indication of the truth of this is the rise in the last 15 years of union based super funds. When compulsory super was established it became clear that traditional financial organisations - Banks, Insurance companies,- were just not going to offer the value that a member owned operation could establish. The simple facts are that managing and investing funds is not rocket science. It deserves a good wage not millions of dollars a year.

Year in and year out the figures come up the same - industry funds are cheaper in terms of costs and actually give better returns that retail (bank/ Insurance) organizations. Simple facts lost in the marketing lies of self interested financial sharks.

I remember with great cynicism the earnest efforts of insurance companies persuading teachers and public servants to get out of government guaranteed defined benefit super schemes to join their expensive plans. It was a crock of sxxx then - it is even smellier now.

As far as storm goes, I think there is benefit in a class action on behalf of investors against the promoters and the banks. I suggest both were in commercial collusion against the interest of the clients. I think that could be a key to the case.

APRA Research on superannuation Fund Performance Oct 2008

While some retail funds earned relatively high net returns and some not-for-profit funds earned relatively low net returns over the five-year period, retail trustees using balanced or growth investment strategies for default investment options generated significantly lower net returns on average than not-for-profit trustees using balanced or growth investment strategies.

The study found that the main component of differences in net returns between fund types is expenses. Retail fund expenses, explicit and embedded, lower the net earnings of the retail sector relative to the not-for-profit sector.

The study also found that neither asset allocation nor investment manager skill explained differences in net returns between fund types. The study also examined the net return and fees for an investor with a $50,000 starting balance in each fund type. This confirmed the net under-performance of retail funds compared with not-for-profit funds and showed that retails funds have higher fees (annual, entry and exit) than other fund types on average.

http://www.apra.gov.au/media-releases/08_27.cfm

 

[Garpal Gumnut]

Storm Financial group needs to be the subject of a Royal Commission and I call on our elected representatives to hold one.

Thousands of people have lost millions of dollars in this debacle.

Allegations have been made in the press today of up to 300 clients being pepped with oxygen in a seminar room, of funds being taken out prior to Christmas by the principals and of illegal taping of clients conversations by "advisers".

As well as Storm, ASIC and the FPA (Financial Planners Association) should be in the terms of reference, as their tolerance of this financial groups errors, incompetence and possible illegal activities has been astoundingly bereft of proper governance.

gg

 

[jonnycage]

im with you there GG

as another local (and thankfully not effected) its really quite shocking
what has happend.


jc

 

[shibby]

Remember, if you had lost money because the share market went down is not in itself a valid reason to lodge a claim. You will have to proof that Storm was negligent and made an error in giving you the advise.

The simple reasoning that "I had losted all my money following the share market collapsed and it was Storm that advised me to buy shares, therefore Storm had been negligent in giving me that advise" will not wash in a court of law.

Storm could have given the advise in good faith and for years investors were making a profit and never complained. Now they have collapsed and suddendly it is negligience?? Come on, pull the other leg.[/QUOTE]

For goodness sake really read some of the entries we are not whingeing we know we have done something unbelievably stupid but the arguement is that we wanted out, we knew we needed to get out, my trusty little excel sheet doesn't lie and yet I still didn't threaten to take legal advice I assumed there was some thing some where I was missing re the whole concept. I was brought up to believe that you go to the experts for advice. I have a BEc with a double major in economics and politics but I never studied financial planning. I went to an expert I paid an expert and didn't respect my own instinct/inteligence that the ship was sinking. I kept saying I will lose my house and I was told I wouldn't. And this didn't all happen overnight we were tortured for months and months and months. I guess I just didn't have the balls.

 

[daisy]

Shibby,
What you are going through must be dreadful. But please be kind to yourself.
Self recrimination doesn't change anything.
Most of the commentary today has been in regards to people's hopes that they are going to get their financial status restored through litigation. The cynics amongst this forum have expressed their opinions of that, for the most part not to be rude or offensive but to shake the blind faith that some of storm's clients have that the courts will fix it and make everything O.K. again.
It seems as if some people are hanging on to that as their salvation. And are probably going to waste the rest of their lives running backwards and forwards from courts and lawyers and letting this eat them up.
It's not easy to start again and the older you get the harder it is. But you are obviously a highly intelligent and I will assume from that resourceful woman. You have grandchildren who must bring great joy into your life. Focus on all the beautiful things that you have in your life and try to lay this to rest. That's not going to be easy when you have financial problems but you are clearly a strong and determined woman and you will find a way.