Storm Financial Group

[Solly]

It appears that this thread is getting derailed by too much angst and unnecessary provocation and bickering. I'm not going to go pointing fingers, I just want it to stop now and for the discussion in this thread to return to the topic at hand: Storm Financial.

This thread is a very useful resource for those following how the whole Storm Financial debacle is unfolding and I would hate to see its usefulness (and the quality of the discussion) diminish due to unfortunate personality clashes.

I will be monitoring this thread a little closer in coming days and I sincerely hope that there will be no need for me to intervene further.

Back on topic please ladies and gentlemen.

Thanks Joe,
There are some imminent major milestones in this saga approaching and this forum will be an invaluable platform for open public discussion and dissection of the impacts of the events.

S

 

[SJG1974]

The bolded section has been asked and answered several times, yet clearly you believe there was a carrot dangled no matter how often actual clients tell you otherwise. That's your right of course, but it is wearying to read it again.

What is your definition of wanting more than you need? I don't need to own my home, I could be content to rent - is striving for home ownership being greedy? I don't need to feed my family nutritious food, we could subsist on McDonalds for less than my average weekly grocery bill - am I being greedy in wanting a good diet? My kids don't need to go to a good school, but I want to give them the best chance in life that I can - am I being greedy here? I've never been outside Australia, but would love to broaden my horizons and gain an insight into how other nationalities live - am I being greedy to aspire to overseas travel one day? I don't need to put myself in a position to help my kids fund their first homes, or leave them a little nestegg, but I'd like to - is this being greedy? Who are you to tell me I can't have aspirations and dreams anyway? If wanting more than you need is the definition of greed, I guess you need to clarify exactly what constitutes a need vs a want. A necessity for you might be a luxury for me, or vice versa. Personally I think a world where nobody aspired to have more than the bare essentials in life would lead to a backward society with no incentives to work hard, no innovations or marvellous inventions etc.

In one way or another Dock, I am sure everyone had some sort of carrot dangled in front of them. Whether it be a self funded retirement, building a massive asset base, tax savings, whatever, it would still be a carrot....otherwise why would you go and pay 7% for Storm to manage your money if you weren't going to get something out of it???

Didn't they dangle some outcome in front of you to get you to pay their fees?

Tax effectiveness?
Asset protection?
Estate Planning?
Wealth creation?

As for greed, the comment you pulled out was based on a definition I found in an online dictionary. http://www.thefreedictionary.com/greed

I haven't said that everyone who walked into Storm was greedy. And nowhere have I considered that having aspirations is greedy.

But, as my post said, the reference to greed followed the comment about the independently wealthy and multi millionaires who had no need to gear yet did so. People like the doctors Frank had alluded to earlier, who had more than enough to live on, to live the kinds of lives that many of us could only dream of, but wanted more.

If you have $10 million in assets and decide to risk it all by gearing to the gills, why would someone do that, when they could plonk it in the bank, and get $500,000 per year at 5%? If you don't think thats greedy, then fine. But I sure as hell do.

Greed motivates a lot of people, we see it every day. For some people, what they have is never enough. It is arguable it motivated the Casimatises, and I have no doubt at all that it would have motivated many Storm victims. But, in reality, who, when they have lost it all, is going to admit they were greedy, when they can blame someone else?

 

[Julia]

I will be monitoring this thread a little closer in the coming days and I sincerely hope that there will be no need for me to intervene further.

Appreciated, Joe. Thank you.

 

[maccka]

I will be monitoring this thread a little closer in the coming days and I sincerely hope that there will be no need for me to intervene further.

Back on topic please ladies and gentlemen, and lets keep it civil.

Thank you all for your co-operation.

:jump: Thank you Joe. :jump:

Let calm, sane heads prevail.

cheers
Maccka

 

[Harleyquin]

Bunyip once again you've avoided giving me a specific answer to my question. All I asked for was an answer from you.

Thank you Solly to your Stormer mate he and/or she have answered my question specifically.

These people Bunyip do have responsibilities and your non specific
/ railroading reply means absolutely nothing to anyone wanting a specific answer.

It's very important that we and future clients of financial planners know exactly where we stand on this issue.

Julia you mentioned Sir O's educational thread regarding learning about investing. I agree he does a great job and would recommend visiting this thread.

Just a suggestion, perhaps you and others with investment experience might suggest suitable threads for stormies and others to visit on the ASF forum.

This is a great forum for stormies and those interested and I don't know of another public forum that offers us this service.

 

[DocK]

In one way or another Dock, I am sure everyone had some sort of carrot dangled in front of them. Whether it be a self funded retirement, building a massive asset base, tax savings, whatever, it would still be a carrot....otherwise why would you go and pay 7% for Storm to manage your money if you weren't going to get something out of it???

Didn't they dangle some outcome in front of you to get you to pay their fees?

Tax effectiveness?
Asset protection?
Estate Planning?
Wealth creation?

As for greed, the comment you pulled out was based on a definition I found in an online dictionary. http://www.thefreedictionary.com/greed

I haven't said that everyone who walked into Storm was greedy. And nowhere have I considered that having aspirations is greedy.

But, as my post said, the reference to greed followed the comment about the independently wealthy and multi millionaires who had no need to gear yet did so. People like the doctors Frank had alluded to earlier, who had more than enough to live on, to live the kinds of lives that many of us could only dream of, but wanted more.

If you have $10 million in assets and decide to risk it all by gearing to the gills, why would someone do that, when they could plonk it in the bank, and get $500,000 per year at 5%? If you don't think thats greedy, then fine. But I sure as hell do.

Greed motivates a lot of people, we see it every day. For some people, what they have is never enough. It is arguable it motivated the Casimatises, and I have no doubt at all that it would have motivated many Storm victims. But, in reality, who, when they have lost it all, is going to admit they were greedy, when they can blame someone else?

OK, let's get the discussion of vegetables over first: if dangling any outcome in front of a client in order to get them to pay fees for service/advice, be it wealth creation, estate planning, tax minimisation etc constitutes your definition of "taking on risk because a carrot was dangled in front of you", then by extension this could apply to just about any client of any financial planner, not just those that were clients of Storm. If I were to go to Doobsy and pay his fee for advice in order to have him draw up a financial plan for me - does this not consitute him "dangling a carrot" in return for a fee? I find the whole endless discussion of ex-Storm clients paying exhorbitant fees or taking on huge risk in the pursuit of some elusive "carrot" to be a bit pointless and silly. Isn't everyone who takes any steps towards their financial future chasing some outcome?

Likewise with greed. I doubt there are any ex-storm clients who are not sick to the back teeth of this endless and repetitive theme re greed. Most sensible people on this thread would agree that the average ex-Storm client was not what would normally be considered wealthy prior to investing with Storm, although some undoubtedly were. I say "so what?". If I wanted to risk my home with the sole goal of dressing myself in Gucci or Armani, globetrotting 1st class while dining on caviar, so what? Does that mean that I wouldn't deserve to be compensated if someone had acted illegaly in their dealings with me because I was "greedy" and therefore "bad"? If I were a retired pensioner who only wanted enough to put cat food on the table for the rest of my days am I then more deserving because I'm clearly not "greedy" and therefore "good", even if the same entity acted towards me in exactly the same way as those bad & greedy people who already had enough to live comfortably??

I'd argue that anyone who makes an investment, be it purchasing an investment property, investing in shares, searching out the best term deposit rates - whether using leverage or not - is doing so in order to put themselves in a better financial position than their current one, or to preserve what they have. If that person doesn't need to do so in order to live, what is their motivation? How can you draw a line and say one is greedy but another not? Is the line dependant on whether they were already better off than you? Or is it based on your own view of what constitutes a comfortable standard of living and what is excessive? Is it evil or wrong for a millionaire to want to increase their wealth, but OK for someone of more modest means? In the case of Storm - if a bank is found by our legal system to have broken a law - should only those who are not judged as having been greedy be compensated as directed by the court? This whole line of thought about greed irritates the hell out of me - it's as if a certain segment of society have decided to claim the moral high ground, based on their own beliefs and values, and judge as greedy and therefore unworthy those who they deem already had more than enough to begin with. As if somehow the designation of greed should absolve illegal action because they somehow deserved it! Smacks of Tall Poppy Syndrome to me, and I find the concept to be totally irrelevant to discussions of the legal proceedings re Storm as a client's motivations have no bearing on the legal issues so far as I know.

Those who have read some of my past posts will know that I personally certainly wasn't what most would consider anywhere near wealthy prior to investing with Storm - but my point is it shouldn't matter. I'd advise any ex-client to value only the opinions/judgements of yourself and those who matter to you.

 

[bunyip]

The bolded section has been asked and answered several times, yet clearly you believe there was a carrot dangled no matter how often actual clients tell you otherwise. That's your right of course, but it is wearying to read it again.

What is your definition of wanting more than you need? I don't need to own my home, I could be content to rent - is striving for home ownership being greedy? I don't need to feed my family nutritious food, we could subsist on McDonalds for less than my average weekly grocery bill - am I being greedy in wanting a good diet? My kids don't need to go to a good school, but I want to give them the best chance in life that I can - am I being greedy here? I've never been outside Australia, but would love to broaden my horizons and gain an insight into how other nationalities live - am I being greedy to aspire to overseas travel one day? I don't need to put myself in a position to help my kids fund their first homes, or leave them a little nestegg, but I'd like to - is this being greedy? Who are you to tell me I can't have aspirations and dreams anyway? If wanting more than you need is the definition of greed, I guess you need to clarify exactly what constitutes a need vs a want. A necessity for you might be a luxury for me, or vice versa. Personally I think a world where nobody aspired to have more than the bare essentials in life would lead to a backward society with no incentives to work hard, no innovations or marvellous inventions etc.

I don’t think we need to get too detailed in our definition of greed.

Frank tells us that 75% of Storm investors were self-funded retirees. I doubt his figures, but it doesn’t really matter what the figure is.
A comfortable and debt-free self-funded retirement is what many people aspire to. But some retirees weren’t satisfied with having achieved this position, so they attempted to substantially boost their already adequate financial position by adopting Storm’s strategy of mortgaging their homes and gearing heavily into the stockmarket.
Now why would any self-funded retiree do this? Pride? Prestige? GREED??
Frank and others strongly reject any suggestion of greed, yet have been unable to put forward any other explanation. Frank admits that it was unnecessary to mortgage his house. Why do it then??
Until he or someone else can explain why they risked everything by investing through Storm when they had absolutely no need to, greed will continue to be suggested as the prime motivation.

I do of course realise that some Stormers were not self-funded retirees and were not motivated by greed.

 

[Harleyquin]

Look at the prime motivator for seeking financial advice. Like so many we werent wealthy either. The biggest motivator for seeking a financial plan at our age was this - we didn't have enough money to retire on. Approaching retirement is a scary thing for most of us, we don't know what we need.

We've been concentrating on working, bringing up our families etc and all of a sudden the next thing on the horizon is retirement.

There are many articles in the print media on what to do to solve this problem and one of the main ones are 'to seek financial advice from a qualified financial planner'

Inflation, is also a problem, over a period of twenty years is our little nest egg going to last the distance?

If the figures we read are correct than less than 1% of the Aussie population will retire comfortably.

 

[SJG1974]

Isn't everyone who takes any steps towards their financial future chasing some outcome?

No doubt. Whenever anyone hands money over for anything they expect an outcome I would think. And that outcome would be relative to what they pay to get it.

I find the whole endless discussion of ex-Storm clients paying exhorbitant fees or taking on huge risk in the pursuit of some elusive "carrot" to be a bit pointless and silly.

But isn’t that pretty much at the heart of why people signed up and why they are where they are? I mean, every person who went in there, everyone, would have had an expectation that they would get something for their fees. Everyone. Doesn’t matter if it was $2,000 or $200,000, everyone would want some kind of a return on their investment.

Typically, the higher the fee, the more you expect in return (and by more I don’t necessarily mean investment return).

Back to the original question which was posed by another poster….just what exactly was it that Storm told clients they would get for their fees? How did someone handing over say $100,000 in up front fees reconcile that with the value they were getting? How could Storm sell that without dangling a carrot of some description?

If I went to doobsy and he charged me $5,000 for advice which, with some strategic planning, could save me $5,000 per annum in tax, then as long as I knew it was legit, I would pay it in a heartbeat. However, if he charged me $5,000 to save me $200 a year in tax, then I would probably walk away.

You said previously Storm didn’t dangle any carrot….

The bolded section has been asked and answered several times, yet clearly you believe there was a carrot dangled no matter how often actual clients tell you otherwise. That's your right of course, but it is wearying to read it again.

Well, if that is the case, then people were, pardon my French, bloody stupid to pay such fees with no expectation of a return on their investment (fee).


As for greed, I am not interested in debating who is greedy and who isn’t, or what circumstances constitute greed and what don’t. Irrelevant I would have thought. I think this has been dragged beyond my initial comment on greed, which was:

Shibby asked about greed...well isn't wanting more than you need the definition of greed? We have read of multi millionaires risking it all in an attempt to make even more. Well if that isn't greed then I don't know what it is, other than perhaps the height of stupidity.

I have clarified where I got the definition from (I didn’t make it up), and as quoted above, when people who have more than enough are prepared to risk it all to have even more, then that is greed in my book. You take the risk, you accept the consequences. That’s life.

Like the whole line about greed irritates the hell out of you, the whole line of “I didn’t know borrowing against my house and then gearing again was risky” irritates the hell out of me.

You have drawn the link between greed being bad and not being greedy being good, and that the bad should be absolved of legal action, not me. Not sure how you draw that conclusion.

The courts will determine whether laws were broken, not this forum, and the compensation to be made, whether these people were greedy or not.

 

[DocK]

I don’t think we need to get too detailed in our definition of greed.

Frank tells us that 75% of Storm investors were self-funded retirees. I doubt his figures, but it doesn’t really matter what the figure is.
A comfortable and debt-free self-funded retirement is what many people aspire to. But some retirees weren’t satisfied with having achieved this position, so they attempted to substantially boost their already adequate financial position by adopting Storm’s strategy of mortgaging their homes and gearing heavily into the stockmarket.
Now why would any self-funded retiree do this? Pride? Prestige? GREED??

Why does it seem to matter so much? What relevance does it have to the issue of whether any banks acted wrongly? If I am full of pride or greed does that mean a bank has the right to act illegally or unethically toward me?

Frank and others strongly reject any suggestion of greed, yet have been unable to put forward any other explanation. Frank admits that it was unnecessary to mortgage his house. Why do it then??
Until he or someone else can explain why they risked everything by investing through Storm when they had absolutely no need to, greed will continue to be suggested as the prime motivation.

I do of course realise that some Stormers were not self-funded retirees and were not motivated by greed.

Why should any of us need to explain our motives to anyone but those we feel a duty towards? If I'm as greedy as hell or live like a monk, what business is it of anyone else's? The law shouldn't care either way. I just don't "get" this insistence for ex-storm clients to have to offer up their personal motivations or attitudes re guilt/blame - I don't believe this thread should be about the "worthy" judging those that invested through Storm. I think we can all agree that the Cassimatii were strongly motivated by greed, but it wasn't their greed as such that led to such a disaster in my mind - more it was their lack of ethics, dishonesty, massive ego and lack of judgement. It is possible to be both greedy and ethical, just as some people who would no doubt be labelled as "greedy" also donate considerable sums to charity and contribute positively to the economy.

If the discussion could move towards the legalities of the Storm collapse, rather than an insistence on ex-clients accepting some arbitrary % of blame upon themselves, the thread could perhaps move in a much more interesting and informative direction for most. I couldn't care less what motivated Frank, HQ, Shibby, Mindstorm or any of the other ex-Storm clients that come to mind, as I don't consider it to be relevant to the question of whether the banks have acted illegally or not. Whether they were rich beyond belief or struggling pensioners makes no difference to me, and I consider it to be none of my business. As to whether they accept some blame for their situations or not, I don't see why that should be a matter for anyone but themselves and certainly don't feel they need to be answerable to strangers on an internet forum.

You can, and possibly will, continue to insist on the "mea culpas" you seem insistent on for some reason, but I can't understand for the life of me why it seems so important to you? Can you perhaps explain why the matter of greed and blame matters so much? Maybe it would help others on this thread to understand your posts, because I must admit when it comes to motivations I'm struggling to understand yours. Not that they're any of my business, of course

 

[doobsy]

Time to jump in from the darkside again.

Until we know a definitive court answer about the banks irresponsible lending then I think we can't assume.

To back this up can I make this point - If client wants to use ANZ (a bank not supposedly right in bed with storm) for the home loan portion of the process. Storm arrange the paperwork and this is processed. Now ANZ have lent against the home as their was equity to lend. If the client has disclosed a level of income and signed the docs I can't see how that is improper lending. If Storm "fudged" the income by including assumed income from the investments how is ANZ to know this?

Wait - I read earlier about the fact they didn't consider the margin loan. Well I am pretty sure it didn't exist. It only existed after the client got their hands on the equity and got it invested. Then the margin loan was created. Again, I am pretty sure EC did this in an order not to alarm the banks.

If there was further lending against the home which required more disclosure and the banks became aware of the ML then I can see that there can be argument the additional lend might be improper. Without that knowledge I can't see how they can get in trouble.

As for third party - we didn't deal with anyone at the bank etc etc - neither do most people these days as they use mortgage brokers or the internet. Banks often don't speak with the end client at all. They do take a signed application as proof the client has seen the application and checked it.

I have already outlined how margin loans work and how interest was not a considered cost as it can be capitalised. I won't rehash old posts.

Moving away from Greed - my bigger problem is risk. So far we haven't really seen Storm clients accept they took huge risks with their money. There is a massive difference between having all of your money invested in a share portfolio and having the same portfolio but the money is geared.

I have always been more interested in hearing from ex clients about how this risk was downplayed so that it was seen as acceptable and encourage them to keep explaining this point to the forum.

For some, greed will be a factor - more more more is a commonly seen driver in my game. For others it was getting to a target and as quickly as possible. Not sure this constitutes greed but we again come down to risk.

Last point - Financial ADVICE. I can laugh at all the FP bashing on here as I know how much value I add. Facts about strategy, legislation etc are facts. How to use them is good advice. Facts about returns are guesses and I don't care how many "years" of historical data is used. Like lightposts, they should be used for illumination and not support. Anyone, anywhere that is telling you what you will earn is a salesman. The only thing I project for clients is income based on current earnings rates. This at least is a guide.

Keep this up though, has been a chuckle a post lately.

 

[doobsy]

Sorry

Regarding motivation - ex stormies - it is important.

If I choose to take $300 out of my account and go and try to triple it playing roulette because I want a new $900 flatscreen I just saw rather than waiting another 2 months, saving my money, and buying it from my savings there is a huge difference in the risk I am taking due to motivation.

I can be motivated to be high risk because I don't want to wait and take the safer option or I can be motivated to be low risk and know I can guarantee I will have the $900 in another 2 months.

Hope that analogy makes some sense. It isn't saying Storm clients were greedy, it is saying that the motivation is an important factor.

 

[maccka]

Time to jump in from the darkside again.
If client wants to use ANZ (a bank not supposedly right in bed with storm) for the home loan portion of the process.

ANZ is also involved. They've just managed to keep outcry to minimum. OR it's been drowned out by the noise around CBA, BOQ, Macquarie etc. I think you'll find that there are very few banks that didn't have their noses in the Storm Financial trough.

cheers
Maccka

 

[doobsy]

ANZ is also involved. They've just managed to keep outcry to minimum. OR it's been drowned out by the noise around CBA, BOQ, Macquarie etc. I think you'll find that there are very few banks that didn't have their noses in the Storm Financial trough.

cheers
Maccka

Maccka

So if a bank lent to a Storm client that automatically makes it improper lending? Even if they did know the details of the strategy (all of which was legal at the time) how does that make it improper lending?

To my knowledge ANZ offered no kickbacks, no ANZ desktop software was used to revalue homes, lending was done on it's merits. Now if that isn't the case then as I have always said any improper lending needs to be addressed but there is a serious misconception on this forum by some that just because a bank used the opportunity to use Storm clients as a source of new lending that it was done improperly or illegally.

On this note my understanding for BOQ is that they considered Storm clients as a low doc loan, bit like a self employed who doesn't necessarily have proof of income. If they have all the signed disclosures we might see some disappointed clients when the court case finishes up.

 

[maccka]

Maccka

So if a bank lent to a Storm client that automatically makes it improper lending? Even if they did know the details of the strategy (all of which was legal at the time) how does that make it improper lending?

Doobsy,

Improper lending is a matter for the courts and various tribunals etc. I have not passed a judgement on such legal matters other than to say...

ANZ is also involved. They've just managed to keep outcry to minimum. OR it's been drowned out by the noise around CBA, BOQ, Macquarie etc. I think you'll find that there are very few banks that didn't have their noses in the Storm Financial trough.

I can control what I say but not the way you choose to read it.

cheers
Maccka

 

[shibby]

Time to jump in from the darkside again.

Until we know a definitive court answer about the banks irresponsible lending then I think we can't assume.

To back this up can I make this point - If client wants to use ANZ (a bank not supposedly right in bed with storm) for the home loan portion of the process. Storm arrange the paperwork and this is processed. Now ANZ have lent against the home as their was equity to lend. If the client has disclosed a level of income and signed the docs I can't see how that is improper lending. If Storm "fudged" the income by including assumed income from the investments how is ANZ to know this?

Wait - I read earlier about the fact they didn't consider the margin loan. Well I am pretty sure it didn't exist. It only existed after the client got their hands on the equity and got it invested. Then the margin loan was created. Again, I am pretty sure EC did this in an order not to alarm the banks.

If there was further lending against the home which required more disclosure and the banks became aware of the ML then I can see that there can be argument the additional lend might be improper. Without that knowledge I can't see how they can get in trouble.

As for third party - we didn't deal with anyone at the bank etc etc - neither do most people these days as they use mortgage brokers or the internet. Banks often don't speak with the end client at all. They do take a signed application as proof the client has seen the application and checked it.

.

18th August 2009 ANZ’s written Submission #379 to the Parliamentary Inquiry and it is (Page 29)
Review Methodology
Our review team analysed the lending files of the identified customers to assess the
quality of the credit decisions and whether they accorded with ANZ’s credit policies at
the time. We are keeping ASIC apprised of the review process and its findings.
Key Findings
(i) Customers
The review found that the lending was predominantly by way of home loans secured
against property. There were also a small number of personal loans and business loans, which we are reviewing to determine whether they were used for Storm investments. ANZ did not provide margin loans to these customers. Of these loans we have determined that, in some cases, the lending decisions did not comply with ANZ’s credit policies.
Following the review of the 160 customer files, we have determined that the lending
decisions for a small number of customers did not comply with ANZ’s credit policies
and we are undertaking further review to assess whether others could also be in that
group.
(ii) ANZ’s relationship with Storm
The review also identified that these were isolated cases and not part of a formal
relationship with Storm Financial. At no time did ANZ have a formal relationship with
Storm.
ANZ was approached by Storm in November 2007 seeking a formal referral arrangement. ANZ declined on the basis that the Storm ‘business model’ was not
compatible with ANZ’s approach to lending. For example, Storm’s preferred approach
was that Storm representatives would:
explain the bank’s lending documentation to customers;

provide the bank with instructions regarding a customer’s account maintenance (.e. renewals);

would arrange for the customer’s 100 point identification check to be completed;

and;

expect the bank to provide a quote for a customer’s lending requirements prior to a full application having been submitted.
On the basis that these requirements were unacceptable to ANZ, it was agreed that ANZ could not work with Storm.

What I would like to point out now is
Storm’s preferred approach was exactly how it was working in 2006 at the time my loan was approved.

This transcript is from the cross examination of ANZ’s representative Mr. Graham Hodges, Deputy Chief Executive Officer, ANZ Banking Group when the Enquiry sat in Melbourne.
[/B]CHAIR- Can you clarify for us that all of the applications that came through ANZ in terms of Storm were done directly by investors/clients themselves, or were some of those
representations or applications, if you like, made on behalf of clients by a Storm representative or a Storm officer?

Mr. Hodges- We have a small number of customers who effectively were Storm customers and Storm sent the loan applications to the bank. Those loans were processed and we do know of a number of loans that were approved that way. We had one loan officer who operated in one of our branches in Queensland who had an informal relationship with Storm as a referral arrangement. We found out about that. When I say ‘we’ did, the loan officer’s supervisor found out about that.
That approach was not in keeping with ANZ’s normal operating procedure.
That loan officer was investigated for her lack of compliance and ultimately was disciplined.
We had our internal investigations people go through the files there and we found that a number of those files were processed in a way that was not consistent with ANZ’s normal operating procedures.
That individual, as I said, was disciplined and ultimately resigned from the bank.

Wait - I read earlier about the fact they didn't consider the margin loan. Well I am pretty sure it didn't exist. It only existed after the client got their hands on the equity and got it invested. Then the margin loan was created. Again, I am pretty sure EC did this in an order not to alarm the banks.

What about if the finance from the intended margin loan had been included as an assett for example sitting in a non existent bank account?
But the monthly expense of that margin loan was ignored.

As for third party - we didn't deal with anyone at the bank etc etc - neither do most people these days as they use mortgage brokers or the internet. Banks often don't speak with the end client at all. They do take a signed application as proof the client has seen the application and checked it.

But what if the client has never seen the assett & liabilities form.

This is all strictly hypothetical of course.

 

[Tysonboss1]

1, If I wanted to risk my home with the sole goal of dressing myself in Gucci or Armani, globetrotting 1st class while dining on caviar, so what? Does that mean that I wouldn't deserve to be compensated if someone had acted illegaly in their dealings with me because I was "greedy" and therefore "bad"?

2, If I were a retired pensioner who only wanted enough to put cat food on the table for the rest of my days am I then more deserving because I'm clearly not "greedy" and therefore "good", even if the same entity acted towards me in exactly the same way as those bad & greedy people who already had enough to live comfortably??

3, I'd argue that anyone who makes an investment, be it purchasing an investment property, investing in shares, searching out the best term deposit rates - whether using leverage or not - is doing so in order to put themselves in a better financial position than their current one, or to preserve what they have.

1, Firstly there is nothing wrong with gambling, If thats what you want to do. But if you choose to gamble, you have to be prepared to face the outcomes. And kicking and screaming when to ball lands on red is a bit off, even if you can catch someone out on a technical detail somewhere does not mean they should be hung, It's like a drink driver blaming a crash on the council because the stop sign was a little to far to the left.

2, The problem with the greed side of things is not the moral issue. The problem is that it lured people into chasing returns higher than they could have expected from a simple interest and dividend returns. when they were attracted to the scheme by the offer of a few extra % points of possible gain, that was greed working, had they been happy with a lower return, A much more risk averse stratergy could have been used.

3, Yes, But there is a big difference between deploying money into an investment following sound investment principles vs Trying to play catch up and making big heavily leveraged bets that the market will go one way or the other.

Anyone who decides to take on debt and buys a House, a business or a share in a business where they can only make money if the price goes up within a given time frame, and will loss their intial capital if the price goes down is gambling.

Here is a lesson, All most all debt based stratergies are based on outright speculation and are a gamble where you can lose a large majority of you initial capital over a very short time frame.

 

[doobsy]

Hi shibby

Thanks for posting that.

Your first questions was:

What about if the finance from the intended margin loan had been included as an assett for example sitting in a non existent bank account?
But the monthly expense of that margin loan was ignored.

Answer: Could not be done as I see it. A margin loan requires assets to back it and as the banks protection. For instance I can't go and get a $100,000 margin loan without putting up some money first. The only way I could see this happening is if say a clients super was drawn, the margin loan set up and an amount borrowed against the original equity (the super). If the home loan was then applied for then you could say there was an asset but would also have to disclose the liability.

By getting the home loan first it meant Storm clients didn't run into any troubles with this disclosure. Where it all went haywire was the "assumed" return on the investments. The "assumed" return at best should have included dividends/distributions but instead seemed to include an amount of "income + growth" based on historical bull market returns.

If the client never saw the income figure or the assets and liabilities forms then they should never have signed. I know this happened and I don't know what else to say. My question back is how did the bank know the client had not seen it? Every chance that Storm was not telling the client everything but also was leaving out certain information when it came to talking to the bank also.

The bank argument about improper lending comes down to 2 points:

1. Could the client service the loan if treated as a normal non storm client. As i see it if the answer is yes then no matter what "relationship" the bank had with Storm this will not be seen as improper lending.

2. For those who could not service the loan without the fudging - How much did the bank branch processing the loan application know. If it can be shown they knew the figures were fanciful then clients will get paid. Obviously certain CBA branches and BOQ North Ward are the clear leaders in this area.

 

[Tysonboss1]

we didn't have enough money to retire on. Approaching retirement is a scary thing for most of us.

.

Hey HQ,

Unforntunatly, trying to play catch up is what gets so many people into trouble, It's not funny.

It does lead even the smartest of people to do silly things, It's not just storm. I have seen people risking huges amounts on crazy things like olive groves, ostrich farms, stored barrels of whisky.

Even highly leveraged property speculation, and for some the ball bounces intheir favour others it doesn't.

The above statement from HQ, should be a warning for all the younger people that they need to start a retirement plan early, So as not to be scared into playing catch up.

 

[Tysonboss1]

Hey HQ,

Unforntunatly, trying to play catch up is what gets so many people into trouble, It's not funny.

It does lead even the smartest of people to do silly things, It's not just storm. I have seen people risking huges amounts on crazy things like olive groves, ostrich farms, stored barrels of whisky.

Even highly leveraged property speculation, and for some the ball bounces intheir favour others it doesn't.

The above statement from HQ, should be a warning for all the younger people that they need to start a retirement plan early, So as not to be scared into playing catch up.

Hi HQ,

Watch this video from the 4min 30sec mark for a few comments on people trying to catch up.