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Storm Financial Group

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More by Leonie Lamont @ theage.com.au
 

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More by Anthony Marx @ couriermail.com.au
 
"Storm Financial founders get more time

The founders of Storm Financial Limited, Emmanuel and Julie Cassimatis, were given more time yesterday to prepare their defence against charges they broke the Corporations Law."
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More by Jason Rawlins @ abc.net.au
 

From: townsvillebulletin.com.au
 

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Solly said:
Here's the audio and transcript of the interview with Peter Ryan on PM.

http://www.abc.net.au/pm/content/2011/s3380477.htm?
Click to expand...

Quoting Ralph Norris from the interview linked above...
"RALPH NORRIS: Well I mean that is a regret because certainly it was something, a relationship that I had no knowledge of, and when I did find out I was not happy at the level of interrogation of that. I think from that perspective I'm proud of the fact that as an organisation we stood up and admitted we'd got it wrong. "

Interesting choice of words there - "and when I did find out I was not happy at the level of interrogation of that."

Hmmm - perhaps the level of interrogation made him unhappy as it forced the bank to admit that they had done something wrong and that they would have to "put it right"....

cheers
Maccka
 
The Banks and Storm

PJ-C Hearings 3rd September 2009 (Public record)

CHAIRMAN””Can I start by saying thank you very much for your submission. There are some extraordinary things in the submission and some things that are similar to what other investors experienced and outlined in their submissions. An interesting point that seems to come out, and you just mentioned it, is that you never got out of the system””you got in, but you never got out””and you reinvested all of your funds or earnings. Obviously it happened to you, but does that appear to be the case right across all Storm investors? In a general sense, did they all stay and reinvest? They never realized their gains?
Ms King””I cannot speak for other Storm investors, but I also got my family into it and some work colleagues, which I obviously totally regret now. For me it has always been about the long-term investment””long-term goals. Through history it has been shown that when the market falls it eventually recovers above where it fell from as long as you are prepared to wait it out. To me it was like a savings account you put away and forgot about.
Senator MASON”–Ms King, I am Senator Brett Mason, the deputy chair of the committee. I will ask you a couple of questions on matters that have been touched on by the chairman.
When your relationship commenced with Storm Financial, you negotiated a relevant LVR. Is that right?
Ms King””My initial involvement was with Nancy Seymour. She was independent at Holland Park. I think when I initially went with her she was with MLC and then the name changed. She went to Ozdaq and hence Storm. My financial plan was with Nancy. She was an authorized representative of Ozdaq. That was negotiated at between 40 and 60 per cent. It was stated throughout my plan that it was manageable.
Senator MASON””That was at between 40 and 60 because that was the way you were managing your risk. Is that right?
Ms King””Yes.
Senator MASON””I understand.
Ms King””That is the way I thought my advisers were managing my risk. It was a ‘save, putaway, don’t think about it’ sort of portfolio for me.
Senator MASON””I understand. So every time your LVR was changed you were informed. Is that right?
Ms King””No.
Senator MASON””So you weren’t.
Ms King””On your statement it would have the LVR and that would change all the time. I just assumed that had something to do with a bank. It was still my personal one for me, which was 40 to 60 and not go above 60.
Senator MASON””So you did not sign anything or you did not agree to any change in your LVR outside the 40 to 60 per cent. Is that right?
Ms King””I did not.
Senator MASON””That is correct, isn’t it?
Ms King””Yes, that is correct.
Senator MASON””You mentioned in your oral evidence before and also in your written submission that you never received a margin call and that your shares were redeemed without your permission. Is that correct?
Ms King””Yes.
Ms King””My last knowledge of my LVR was around 67 per cent, so when the market started to fall I knew that I would come close to or get a margin call. We were on the phone to our adviser from early October. I produced extra equity. I had my husband’s business to cover the margin. There were all these precautions in place to show that we could service that debt and not sell anything out, because I did not want to realise my losses. Then on 14 November I got a letter in the PO box, saying that around 450,000 of my shares were sold. Prior to that, whenever shares were sold a letter was presented to me that I had to sign for the redemption. I never got anything like that. I contacted Storm, and my adviser was dumbfounded. He said I was not margin called. I demanded to be put back in the market. The next thing I found out was when everything was sold out, which was by 22 December and was only because I was on holidays with my mother and she received a phone call from Macquarie in relation to her matter. I could not talk to Storm advisers then and everything was sold.
Senator MASON””Coming to the crux of it, on page 4 of your written submission, Ms King, down the bottom , in your second-last paragraph, you say:
I sent a complaint to John Clothier, Head of investment lending, Colonial on 9th February 2009 outlining my concerns and querying the lack of any contact regarding my margin loans and the subsequent selling down of the security. I received a reply in which he states; “It was only December 2008, when CGI became aware that Storm had not been notifying its clients of the position of their margin loans accounts and there had been a prolonged period of inadequate responses to margin calls by Storm, that CGI took the extraordinary step of contacting borrowers directly” …
That is a direct quote from Mr Clothier, is it?
Ms King””Yes, that is from the letter that he sent me.
Senator MASON””All the evidence we have heard is that the relationship is between the bank and the client””that is, between, say, CGI and you. So why is he talking about an ‘extraordinary step of contacting borrowers directly’?
Ms King””You are asking me what? I am a bit confused.
Senator MASON””The point is that many other banks lent margin loans to Storm clients and they contacted the clients directly. CGI did not until very””
Ms King””I went to 107 per cent and I still did not get contacted and they withdrew money out of my Macquarie account without my authorisation. So tell me how that works? They have not got active enduring power of attorney over my account.
Senator MASON””We do not know, Ms King.
Senator WILLIAMS””Just following on from Senator Mason’s point on your letter from Mr Clothier, you say on the front page of your submission:Information in the financial plan and from Colonial original loan approval documents was that in the event of my portfolioreaching buffer and margin trigger points I would be contacted by the lender and given notice to correct the LVR. This is documented and available.
Ms King””In my financial plan it is documented the lender will also monitor your portfolio daily, the lender will require you to make a margin call and the lender will ask you to provide additional funds to restore at least the minimum equity position. I have the original document from Colonial for my loan. In the back it talks about how it will notify you. Obviously this will be up to a court of law, but it depends on how they define ‘you’. My advisers did not take the application out. It is in my name. They are not acting as an agent. It does not say ‘as an agent’ in there. So my understanding is that I am their client and they are to advise me. That is what it is in my financial plan and the associated letter that came from Colonial at the time of taking the loan out.
Senator McLUCAS””and you have been hurt very badly, as have many others. Do you have any advice to our committee about what we should be recommending to government as to what would have assisted you in your relationship with your adviser or your relationship with the bank so that this event could have been prevented? Is there anything that we as a government can do to help ensure that this does not happen again?
Ms King””What you can do to ensure this does not happen again is to bring the principal offenders, the culprits to justice and put them in jail as a warning example to others. If those who created this are not brought to justice then history will just repeat itself.
 
Should financial advisers have a fiduciary responsibility?

Someone stated in an earlier posting, “…we acted on the word of a salesman.” In fact, he is right in a way BUT we didn’t know that at the time. Therefore, we had no way of telling without the benefit of hindsight that he was not acting in our best interests. As in the case of Doctor Patel, we assumed that he would appreciate that he had a “duty of care” and would act accordingly.

Unlike the ‘Doctor Patel’ scenario, however, our financial adviser was fully qualified to give financial advice. He was therefore in a position through his experience in the industry to devise a financial strategy for us tailored around our financial circumstances and our future welfare. We now know that he did nothing of the kind but rather applied a financial philosophy that emanated from head office. In fact, he and his fellow financial advisers could do little else if they wanted to continue to work for Storm.

Mr Jolyon FORSYTH, who is the President of the Australian Investors Association, spoke before the 'Parliamentary Joint-Committee on Corporations and Financial Services' on 3rd September 2009. Here is some of what he had to say:

“We appreciate the opportunity to speak before this inquiry on behalf of thousands of independent investors, many of whom are our members, and on behalf of investors who, although not members, have told us their tales of woe or we read their stories in the press. We have thought for years that the financial services industry has many disgraceful aspects. We regret that it took some multi-million-dollar losses of mum and dad investors for these disgraceful aspects to become obvious to everyone.

… We believe that the fundamental matter to be resolved is that advice must be objective, appropriate and free of conflict of interest. I think we are all well aware of the fact that if I were to go to a financial planner with, say, an inheritance of half a million dollars, the most likely advice I would get would be to put it into managed funds or possibly Australian shares, with little or any consideration being given as to whether a better use of the funds might be to pay off the mortgage, contribute to an industry super fund, pay off other debts, and so on. The advice I would receive would be to do something that led to a commission payment to the adviser””not all advisers but a huge percentage of them. The AIA sees such an industry as being about selling rather than advising.

Our submission asks that you: (a) remove inherent conflicts of interest at present in the industry; (b) separate the sales and advice functions; (c) raise the low educational level that was required of advisers; (d) address the illusion of independence of advisory firms connected with banks and insurance companies; (e) provide simple investment risk signals for consumers; (f) require payment for services to be initiated by the client, not the investment product provider; (g) require clients to have more control over the investment advisory process; (h) promote investment education among consumers; and (i) provide for better regulation and enforcement within financial services.

I remind the committee of the case of the pensioner widow reported in the Australian on Monday morning who signed a blank margin loan application form that someone else filled in for a $208,000 additional loan. This was added to her existing $625,000 margin loan. The form stated that she earned $104,000 per month, even though she was in fact a pensioner. She now faces the loss of her home. So we present ourselves here today to reflect the point of view of investors, many of whom have lost confidence in the financial planning and advisory industry."

His colleague, Mr. Scott MCKENSIE – (Vice President) also commented:

“We have had four or five years to try to get it right and that has not worked. I can tell you that the layers of fees that exist between the investor and the product manufacturer via the licensee are so many that, even if you disclosed them, all the client would be is shocked; he would not understand it. I am talking about shelf fees and all manner of fees that you would come across. I do not think disclosure is the answer. I think fiduciary responsibility is the answer."

MR. ROBERT - "We took advice in the MIS inquiry about providers of MIS who had done a nine-day course and were then qualified to provide advice into MIS. Do you believe that is too short?"

Mr McKenzie””"If the person who has done the nine-day course is just selling and explaining the features of one particular product, I have no problem. But, if they are dealing with somebody who walks in off the street and says, ‘I’ve got a quarter of a million dollars here and I don’t know what to do with it,’ that is obviously a problem. We are talking about the last 20 to 30 years of someone’s life. For that sort of money to go into the hands of someone who is flogging products is criminal. I know it really is hard, but this is such a serious matter that we should begin at the beginning and say, ‘Let’s set aside a class of people who, by virtue of education, experience, personal characteristics””"

Senator MASON””"And legal duty."

Mr McKenzie””"...and fiduciary responsibility hanging over them, are the people we are going to trust to give advice about how people use their money."
 
Solly said:
Here's the audio and transcript of the interview with Peter Ryan on PM.

http://www.abc.net.au/pm/content/2011/s3380477.htm?
Click to expand...

Hi Solly,

Here's an extract from my book “PLAUSIBLE DENIABILITY” which explains the concept!

“'Plausible deniability' for those that are not familiar with this strategy is one where the upper rungs of management in an organisation pass the blame to those on the lower rungs, and the people on the lower rungs are often inaccessible (sacked in the case of the CBA). It, then becomes difficult to establish exactly who is to blame.

It’s a ploy often used by those that gave the orders in the first place to distance themselves from any responsibility. In the case that illegal or otherwise disreputable and unpopular activities become public, high-ranking executives will employ this ruse to deny any awareness of such acts by those below them in the chain of command.

The former CEO, Mr. Ralph Norris, of the CBA seems to fit the bill perfectly.

The term 'plausible deniability' can also apply to any act that leaves little or no evidence of wrongdoing or abuse. On this score, Storm Financial and the Banks involved fall down badly. There’s enough evidence lying around to condemn them all, if only we can get them into a court room.

Unfortunately, parties such as the Parliamentary Joint-Committee and ASIC who have been investigating this matter seem at times to have trouble focussing on the body of evidence relating to the crimes of the Banks. One has to presume that Storm Financial is easier quarry to hunt down.

'Plausible deniability' is also a legal concept by the way. It refers to lack of evidence (or so the Banks think) proving an allegation. Standards of proof vary in civil and criminal cases. In civil cases, the standard of proof is 'more likely so than not' whereas in a criminal matter, the standard is 'beyond a reasonable doubt'.
If your opponent lacks incontrovertible proof (evidence) of their allegation, you can 'plausibly deny' the allegation even though it may be true.

Devious? ABSOLUTELY but anything goes in the case of Storm and the Banks because the stakes are so high! The CBA denies many of the alleged charges against it but it agreed to a resolution scheme early on. WHY? Because they are as guilty as hell and this was one way of covering up from an unsuspecting public many of their wrongdoings in relation to their Storm customers.

Yet, ASIC is only charging this Bank with UMIS? Can you believe it! The CBA is the worst offender and they will walk away if UMIS isn't proven. Fortunately, Levitt Robinson are in our corner and will be taking the CBA to task. This is not the point though! ASIC should be the one pursuing those that have breached the Corporation Act' but in the case of the CBA, apparently there is a "hands off" edict. It makes you wonder sometimes who is actually in our corner?
 


Hi Frank

I have always found using the Latin phrase "Mea Culpa" to describe their involvement rather interesting. It's been a while since I studied Latin but doesn't this phrase translate as "my fault" or "my mistake" ?

I'm rather impressed with the phrase "I was not happy at the level of interrogation of that". I'm currently working on a response document regarding a matter in my real world and I'm trying to use that phrase in response to an element of a proposal I am not in agreement with.

I also see that Sir Ralph will have a few things to occupy him in retirement, I believe he will join the Origin Energy board as a non-executive director early next year.

S
 
Solly said:
Full article now available online @ http://www.townsvillebulletin.com.au/article/2011/12/01/287551_news.html

GG,
Had that drink with Byrnsie yet?

S
Click to expand...

Apologies for not getting back. I caught up with Byrnsie in the Great Northern this week, and our low ball bid for Casa Cassimatis did not impress.

In a way I am happy to let another punter take Manny's pile, as even a mob of half cut believers would find it difficult to clean the chandelier. I prefer my Waterford Glass on a bar rather than hung from a ceiling.

Our chance to be in at the beginning of a new Edifice of the Lord, has gone, mate.

On a more worldly note, It never ceases to astound me that the proceeds of these sales of Cassimatis wealth do not go in to a fund to pay back the victims of this financial obscenity. Manny is so far ahead of the regulators, I reckon he can afford to drop $2m on the Melton Tce. pile.

He should really start a church.

gg
 
Thanks Junior and Doobsy. I was surprised when I went to another planner and they offered to give us a SOA first up so that we could decide as storm didn't do this. Interesting what is supposed to happen and what actually happened are two different things when it came to storm. The SOA Is a thorn in my side now that I know what should have happened.

Basically they read out the paperwork for the SOA and said 'just sign here as I have to show you this and if you could just sign and date it to show that you've seen it'. Three months later when all the loans had been approved by the banks, we were given the SOA, told to go home and read it and sign every page, but no need to date every page. Very interesting is probably an understatment. I wonder how many other stormies had the same experience.

If the SOA aren't signed on every page, how can the bank doing the lending, take the SOA as being fully signed and understood by the client?

Seems its very easy for a financial planner, who isn't on the level, to give this 'booklet' out when it suits them rather than when they should give it to the client. Had we known we were supposed to get one first up it would have been different. There's no way of making sure that the SOA is done uniformly obviously.

Another area that needs looking at, but I don't know how this can be monitored. Maybe the Financial Planning people, have some ideas, or need to produce a basic 'kit' for all clients to fill out BEFORE seeking any form of financial advice, and a standardised, if possible, SOA filled out.

I can see that this is were the 'research' comes in, two years plus ago when I started posting I and others were hauled over the coals for not doing our research. I went away thinking 'that I should have done our research' as was suggested by other forum members. I could see that 'doing one's research' would protect the future client.

However today I've changed my mind, the insistance on 'doing your own research' is also a copout from those in the financial industry who aren't doing their job properly. Those of you who are doing your job properly obviously have the financial wellbeing of their clients as your main focus, which is commendable.

If this 'discussion' /'debate' /'argument' /'whatever you like to call it', achieves one thing and that is to nut out the major problems and problem planners who are contaminating the whole industry then it's worth it in my humble opinion.

See there's a lot of news, in the news over this past couple of days. Did gg and co buy the mansion for their new 'church', or did he leave it for someone who appreciates the gaudiness?
 
Harleyquin said:
........If the SOA aren't signed on every page, how can the bank doing the lending, take the SOA as being fully signed and understood by the client?....
Click to expand...

HQ, the SOA is between the client and the adviser. A financial institution lending the funds has no interest in it - and before anyone starts saying they should, consider the Privacy Act implications plus the sheer volume of gumph passing back and forth and the additional cost [which would, in some form, be passed on to the client] of such a process.
 

Hope the new owners hang an "under new ownership" sign on the front lawn - just in case some storm-battered locals forget and egg the place On a serious note - I thought that storm had considerable business loans with the CBA and presumed that they'd have tied Manny & Jules up with directors' guarantees - it sure goes against the grain that their ex-clients are left struggling with left-over home loans, yet they get to pocket the proceeds themselves. I guess I just assumed the CBA would have a mortgage over the place and apply the proceeds to whatever storm/Cassimatis still owe them.
 

DocK, I have been informed that it is amazing what one can do if there is a family trust involved. Remember when EC had that $2m "dividend" shortly before the whole thing turned into a pile of mud? I'll let you guess to what entity was on the name of the cheque. You guessed correctly.
 
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