Storm Financial Group

[Julia]

Remember that this forum is primarily here to educate people on financial matters, not to make people feel better about their mistakes. If I was having a private conversation with an ex storm client I'd never point out their mistakes to them unless they asked. There's no point rubbing salt into the wound. But this is a public forum that new investors come to learn form. Every time you try to lay 100% of the blame at the feet of the advisers and lenders it sends a message to new investors that it's unnecessary to monitor your own investments. That's not a message we should encourage. Unless of course you want someone else to get caught in the next flawed investment scheme that pops up, because I guarantee you there will be another.

+1. This has been the case throughout this thread. i.e. when any of us have contradicted the notion offered that the investors had no responsibility for accepting advice offered we have been targeted with abuse.
That doesn't help anyone and is entirely counterproductive. As is criticism that ASF members are ignorant with regard to the exact nature of matters before the court. Solly, you have previously been politely asked to share your understanding of what has happened in court and you have been unresponsive.

I don't know, but I'd imagine that the recent publicity about how widespread were the dodgy lodoc loans would add to the Storm investors' case. It's still totally unclear to me who was responsible for the altering of client details on the application forms. I'd have thought this was a very significant point.

 

[Solly]

bunyip,
The advice I have received indicates that the content of my posts are fully compliant. I have received no direction to the contrary. I have no understanding of the intent of your statement where you mention "approval".
Like yours, my amazement will always be, my amazement. You possess no direct knowledge of my fixations.
I make no amendment or retractions to my initial post.

Lone Wolf,
Expressing amazement with respect to the understanding of the implementation of due process, is not expressing criticism.

Julia,
It is not prudent for me, at this stage, to pass commentary on the daily proceedings. Although I do invite comment from other interested parties.

S

 

[Lone Wolf]

Lone Wolf,
Expressing amazement with respect to the understanding of the implementation of due process, is not expressing criticism.

You expressed amazement at the lack of understanding other poster have about legal matters when it was clear that they weren't discussing legal matters. My apologies if I mistook your comment as an attempt to belittle others.

Carry on.

 

[jjtebj12]

I have been a passive observer of this thread of late and have been hesitant in passing a view.

It amazes me that some participants of this thread display a lack of understanding of what are the current matters that are before the bench.

There has been no breach of any law, act, regulation or subordinate legislation by an investor who made the decision to invest in Storm.

What is being tested is not the investors decision to invest.

Opinions of what actions investors should have taken are of no consequence, carry no authority and are not enforceable in regard to the current actions that are underway.

I am of the view that it would be beneficial if matters do go to trial. It would also be extremely beneficial to observe the transparency and the body of evidence.

S

100% agree! It is about the relationships and agreements that investors were not aware of. In so many ways I hope this goes the distance as I know the media will be crawling all over it as the evidence will demonstrate the shocking behaviour by the banks and Cassimatis. The evidence will outline everything. For the bank supporters-I will await your comments in the coming months.
As for margin call - there wasn't one!
Also if you think banks offer settlements because they are nice people, think again-they know they have failed, they just want to minimise the financial payout.

 

[ASICK]

Sometimes genuine efforts are made by a party to settle a dispute in order to limit potential damage to business even if that party feels it has no legal obligation to make such a effort (on the basis of 'no admitted liability' or an a 'without prejudice' basis) - sometimes when such efforts are made, the other party, to its detriment, mistakenly sees the effort as a sign of weakness.

I sincerely hope that there is no mistake on the part of Storm investors who didn't take up bank offers in preference to a court order which may not be to their collective liking.

 

[Ironhalo]

Hi gang, it's been a while.

Frankly, I'm surprised this is still being talked about, and from about two years ago, it appears this forum thread moves in circles, with the same arguments rearing their head over and over again. Most Storm victims have simply realised that this is a lost cause and that putting faith in the legal system is just going to lead to disappointment.

I got out of Storm when the sheet was hitting the fan (after demanding to be sold out when I realised that Storm/the bank wasn't going to inform me of a margin call), but still came away with a loss. I've learned my lesson about paying for a service and not getting that service doesn't mean you are protected by law.

Personally, I want to see the Cassimatis's get their come-uppence. The only winners at the moment are going to lawyers sadly.

 

[Solly]

Hi gang, it's been a while.

Frankly, I'm surprised this is still being talked about, and from about two years ago, it appears this forum thread moves in circles, with the same arguments rearing their head over and over again. Most Storm victims have simply realised that this is a lost cause and that putting faith in the legal system is just going to lead to disappointment.

I got out of Storm when the sheet was hitting the fan (after demanding to be sold out when I realised that Storm/the bank wasn't going to inform me of a margin call), but still came away with a loss. I've learned my lesson about paying for a service and not getting that service doesn't mean you are protected by law.

Personally, I want to see the Cassimatis's get their come-uppence. The only winners at the moment are going to lawyers sadly.

Welcome back Ironhalo,

Regarding the only winners being the lawyers, I hold a different view. I believe that there will be some pleasant surprises forthcoming.

S

 

[Solly]

You expressed amazement at the lack of understanding other poster have about legal matters when it was clear that they weren't discussing legal matters. My apologies if I mistook your comment as an attempt to belittle others.

Carry on.

Thank you Lone Wolf,

I suppose because I have had many touch points with the ongoing events in this saga,
I have formed a view that not many others in this thread may share.

I have always held the belief that it is reasonable to expect that when a person engages a qualified professional organisation for expert advice, the advice offered should be of the highest impeccable standard.

I realise others may feel that forums such as this offer a platform to educate, inform and bring awareness of the strengths and pitfalls of investing. Unfortunately I believe the real impact of platforms such as this are limited in their effectiveness by lack of reach.

My view is that a more effective form of protection can only be effected through legislation, regulation and enforcement. Then followed by punitive measures for breaches and non-compliance.

S

 

[maccka]

Thank you Lone Wolf,

I suppose because I have had many touch points with the ongoing events in this saga,
I have formed a view that not many others in this thread may share.

I have always held the belief that it is reasonable to expect that when a person engages a qualified professional organisation for expert advice, the advice offered should be of the highest impeccable standard.

I realise others may feel that forums such as this offer a platform to educate, inform and bring awareness of the strengths and pitfalls of investing. Unfortunately I believe the real impact of platforms such as this are limited in their effectiveness by lack of reach.

My view is that a more effective form of protection can only be effected through legislation, regulation and enforcement. Then followed by punitive measures for breaches and non-compliance.

S

+1 Great post thanks Solly!

The value I see in all this going to court is that evidence which has previously been unavailable (and in some cases hidden) will be placed in the public arena. This information can only better inform the legislation, regulation and enforcement processes.

Here's hoping that Christmas 2012 wipes out the horror that Christmas time currently brings many Storm families.

Cheers
Maccka

 

[Lone Wolf]

Thank you Lone Wolf,

I suppose because I have had many touch points with the ongoing events in this saga,
I have formed a view that not many others in this thread may share.

I have always held the belief that it is reasonable to expect that when a person engages a qualified professional organisation for expert advice, the advice offered should be of the highest impeccable standard.

I realise others may feel that forums such as this offer a platform to educate, inform and bring awareness of the strengths and pitfalls of investing. Unfortunately I believe the real impact of platforms such as this are limited in their effectiveness by lack of reach.

My view is that a more effective form of protection can only be effected through legislation, regulation and enforcement. Then followed by punitive measures for breaches and non-compliance.

S

I don't believe anyone disagrees with that. Yes, if you pay for a service you deserve to get what you paid for. Yes, if the service you receive does not match what was promised then there needs to be compensation. Yes, there should be regulation and enforcement of financial advice. And yes, forums like these have limited ability to educate people due to their lack of reach.

So here we are on this forum. You seem to suggest that attempting to educate people is mostly a wasted effort due to lack of reach. But this forum has absolutely zero impact on legislation. So do we give up trying to help people altogether and hope that someday legislation will actually protect people before they get hurt rather than after? It is my personal belief that many more people will be hurt by bad financial advice before your ideal world becomes a reality. So until that time, I am in favor of trying to reach out to the few people we can. If even one person avoids the hardship of financial devastation due to comments on this thread, is that not worthwhile?

I also believe legislation and regulation won't fix 100% of the problem. There is a lot of bad financial advice out there that's technically all above board. Many financial advisers are more like financial product salesmen. If you go in blind you could end up with something that is likely to damage your finances, yet at the same time it's a perfectly legitimate strategy that you won't be compensated for if it goes bad. How does legislation, regulation and enforcement help people who simply received bad advice?

 

[Solly]

I don't believe anyone disagrees with that. Yes, if you pay for a service you deserve to get what you paid for. Yes, if the service you receive does not match what was promised then there needs to be compensation. Yes, there should be regulation and enforcement of financial advice. And yes, forums like these have limited ability to educate people due to their lack of reach.

So here we are on this forum. You seem to suggest that attempting to educate people is mostly a wasted effort due to lack of reach. But this forum has absolutely zero impact on legislation. So do we give up trying to help people altogether and hope that someday legislation will actually protect people before they get hurt rather than after? It is my personal belief that many more people will be hurt by bad financial advice before your ideal world becomes a reality. So until that time, I am in favor of trying to reach out to the few people we can. If even one person avoids the hardship of financial devastation due to comments on this thread, is that not worthwhile?

I also believe legislation and regulation won't fix 100% of the problem. There is a lot of bad financial advice out there that's technically all above board. Many financial advisers are more like financial product salesmen. If you go in blind you could end up with something that is likely to damage your finances, yet at the same time it's a perfectly legitimate strategy that you won't be compensated for if it goes bad. How does legislation, regulation and enforcement help people who simply received bad advice?

My concern is that many people only end up on forums such as this, post financial trauma, as evidenced by comments posted by some of those impacted by the Storm event. If the value of legislation, regulation and enforcement is seen to be diminished, I have no other suggestion that will offer protections.

My view is that the only action that those who have been harmed by "bad advice" is to seek remedy through the judicial system. Maybe it is the simplified access to this system by those in dire need that would be most beneficial. Alas I am not a legislator, but improvements would be most welcomed.

S

 

[bunyip]

+1. This has been the case throughout this thread. i.e. when any of us have contradicted the notion offered that the investors had no responsibility for accepting advice offered we have been targeted with abuse.
That doesn't help anyone and is entirely counterproductive. .

Julia

This phenomenon has occurred throughout history - I believe it's called 'shooting the messenger'.

 

[bunyip]

I think the Bad Investment decision could be placed at the feet of the so called Professional Advisers that gave the Financial Advice and those who funded it.

I think the bad investment decision can be placed at the feet of the people who made it – the Storm clients themselves.

The banks funded your investments at your request. But they didn’t make the investment decision for you.
That decision was made by you, and you’d already made it before you approached the banks.

Storm gave you bad advice. But they didn’t make the investment decision for you. The decision to accept their advice and act upon it was made by you.

 

[Julia]

Julia

This phenomenon has occurred throughout history - I believe it's called 'shooting the messenger'.

OK. I regret raising it again, however. We've been through it over and over. The thread had moved on to being more constructive so I apologise for discussing the issue again.

 

[Frank Ainslie]

“Let justice be done, though the heavens fall.” - (Fiat justitia, ruat coelum.) (Part 4)

Linked credit provider

Anyone who believes that the charges we and ASIC have brought against the CBA, the Macquarie Bank and the Bank of Queensland are frivolous and lightweight should think again. Certainly, the banks involved are taking these charges seriously because they fully realize that their past dealings with Storm could well be construed as unlawful in both statute and commercial law.

For those Storm investors that were caught up in this financial disaster, (and I am really writing these postings for them) they should take heart from the fact that ASIC has deemed that the Banks have indeed broken the law in a number of ways. The very fact that ASIC is pursuing the banks should be proof enough to even the biggest skeptics that these banks have not always acted in good faith where we are concerned. The body of evidence that ASIC has gathered over the last four years (which has been made freely available to our legal team as well) combined with that our lawyers have accumulated will provide more than enough proof to substantiate all of these charges.

We should be mindful however that ASIC and our lawyers are coming at this from different perspectives. ASIC is concerned with breaches of Corporate Law whereas our lawyers will focus on the whole which encompasses breaches in commercial law. This dual approach does however provide us with a two-pronged attack much like a snake’s tongue. We hope the affect is just as lethal!

Despite what some have suggested on this Forum in the past, the charges against the three banks in question are solid and real. The banks therefore have good reason to be worried. Personally, I believe that the Banks may be able to deflect a few boulders if their lawyers are up to the job but some rocks will definitely get through. Just how damaging the impact of these will be for the banks concerned depends upon what is upheld by the Court. ‘UMIS’ and ‘Linked Credit Provider’ if proven will impact very heavily whereas some other charges will not be as damaging if upheld in terms of overall compensation.

The charge of “linked credit provider” if proven is one such charge that could do some real damage to these banks. This particular aspect has not got a real mention by me until now but that doesn’t mean that I do not consider it a serious threat as far as the banks go.

The relationship between these Banks and Storm is the key to establishing “linked credit provider”. Some on this Forum (for reasons I have not really been able to work out) have long argued that the actions of Storm should not reflect on the banks that Storm dealt with! The Law deems otherwise and so it should because the Storm debacle arose because ALL the parties involved did the wrong thing; not just Storm on its own! Storm did not operate in a vacuum but rather enticed investors with deals that the Banks endorsed and supported both by their extending loans and promoting the Storm brands.

If we examine the relationship between the CBA and Storm for instance, it reeks of mutual interest and collusion. For one Colonial First State (CBA) was a fund manager for the index funds (Storm Badged Funds) so the CBA could hardly be called a disinterested party. At June 30, 2008, the Storm-Colonial (CBA) margin lending book totalled $1.1 billion and the "traditional bank lending book" totalled just over $1 billion. Storm-badged funds with Colonial totalled $1 billion.

Then you have the CBA/Storm formulated agreement dated 18th May 2005 which dictated how they would jointly operate and administer their mutual CBA customers/clients. Macquarie Bank had a similar arrangement in place.

No, I would say that the CBA and Storm were up close and personal rather than on nodding terms, and had been for some years!

The Banks in the dock, namely the CBA, the Macquarie Bank and the Bank of Queensland continue to maintain that their relationship with Storm was an “arm’s length” one and the business they received from Storm was treated no differently than that received from other quarters. Funny, that, when the known facts tell us otherwise.

The definition of an “arm's length” relationship in law is a commercial arrangement between two parties free and independent of each other, and without some special relationship (such as being a relative for instance), having another deal on the side or one party having complete control of the other” In other words, no “undue influence” exists!

The relationship between the three banks in questions and Storm was such that they all became closely linked in their dealings with Storm and this could have serious ramifications for these Banks if it can be shown that they qualified as “linked credit providers” under the Act.

The TRADE PRACTICES REVISION ACT 1986 No. 17 of 1986 - SECT 37 States among other things that:
“a consumer enters into a contract with a linked credit provider of a corporation (in this section also referred to as the 'supplier') for the provision of credit in respect of the supply by the supplier of goods or services, or goods and services, to the consumer, and the consumer suffers loss or damage as a result of misrepresentation, breach of contract, or failure of consideration in relation to the
contract, or as a result of a breach of a condition that is implied in the contract by virtue of section 70, 71 or 72 or of a warranty that is implied in the contract by virtue of section 74, the supplier and the linked credit provider are, subject to this section, jointly and severally liable to the consumer for the amount of the loss or damage, and the consumer may recover that amount by action in accordance with this section in a court of competent jurisdiction.

(3) A linked credit provider of a particular supplier is not liable to a consumer by virtue of sub-section (1) in proceedings arising under that sub-section if the credit provider establishes-

(a) that the credit provided by the credit provider to the consumer was the result of an approach made to the credit provider by the consumer that was not induced by the supplier…”

I won’t bore you with the rest but you will get the general drift.

Incidentally, it should be understood that any sections of the law quoted by me here or previously relates to the Law as it stood then. Some laws have been amended since 2008, no doubt, to plug up the “loopholes” that the collapse of Storm highlighted. For one, "The ACL has replaced consumer protection provisions in 17 pieces of State and Territory legislation and in the Trade Practices Act 1974 (TPA). Related to these reforms, as of 1 January 2011, the TPA has been renamed the Competition and Consumer Act 2010 (CCA). Several provisions that were previously in the TPA have been repealed and replaced with new provisions in the ACL."

These amendments will not affect what happened in 2008 or before because the Laws that existed then will be the only consideration as far as these matter are concerned.

So what does all this all mean for the banks if “linked credit provider” is established? For one it means that if the Court decides that the CBA or any other bank involved with Storm can be classified as a linked credit provider, that Bank will become liable for the actions of Storm as well as there own. Any losses that resulted from such actions should then fall back on those banks – “the consumer may recover that amount by action in accordance with this section in a court of competent jurisdiction”. Just how much that will mean in the way of damages is anyone’s guess but it will be substantial. Indeed, the compensation that may be forthcoming if the charge of “unlinked credit provider” is upheld by the Court may be as good as or exceed that if UMIS is proven. Therefore, it remains an important part of our case and one, I feel, that the Banks will have to defend vigorously.

 

[ASICK]

Good afternoon Frank - do you have a copy of the banks' defences you're able to post? Either way, I'd be interested if you'd give an outline of those defences. [blow by blow, claim <--> defence, just briefly is fine]

 

[Frank Ainslie]

Thank you Lone Wolf,

I suppose because I have had many touch points with the ongoing events in this saga,
I have formed a view that not many others in this thread may share.

I have always held the belief that it is reasonable to expect that when a person engages a qualified professional organisation for expert advice, the advice offered should be of the highest impeccable standard.

I realise others may feel that forums such as this offer a platform to educate, inform and bring awareness of the strengths and pitfalls of investing. Unfortunately I believe the real impact of platforms such as this are limited in their effectiveness by lack of reach.

My view is that a more effective form of protection can only be effected through legislation, regulation and enforcement. Then followed by punitive measures for breaches and non-compliance.

S

Hi Solly,

I couldn't agree with you more!

Some on this forum just don’t get it! In fact I have come to the conclusion from reading through the recent comments of some posters that they never will which makes my efforts to explain any wrongdoings in law that have taken place somewhat pointless.

“Never let the truth get in the way of my opinion!” seems the order of the day on this forum judging by the commentary to date. It seems that people have reverted to their familiar mantra, “If people had used their commonsense, none of this would have happened!”

It’s not a lesson in the Law that people need here on this Forum but rather a history lesson on what actually occurred in 2008 that led to a financial meltdown around the world because this is the only way they are going to lose their naïve view of banks and investment brokers. They also seem to believe that Banks are not subjected to the law in the same way the rest of us are so any law suits we bring against them are doomed to failure. In fact they are so insistent that we will lose our case against the banks that we might as well pack up and go home now. But then I forgot, few of us have homes to go back to!

You also have a certain number of people here that rather fancy themselves as financial gurus and are predisposed to expound their notions at the least pretext. They seem to think that only by our fully confessing to our complete lack of financial know-how will we "Stormies' receive absolution from them. After all, what happened to us was all our fault because we should have been blessed with precognition and have armed ourselves with lie detectors before entering the badlands where shonky financial advisers and dubious bank managers reside.

Am I being silly! Quite but then so are they for expounding this nonsense and expecting sensible people to swallow it. The Law is supposed to protect investors from charlatans and thieves and if it doesn’t do so, it needs amending a.s.a.p. We are taking these banks to Court because they have broken the law. They wouldn’t be facing these charges IF the Court felt that the banks did not have a case to answer. The fact that ASIC is on board only lends weight to this argument. Whether some of those on this Fourm in their infinite wisdom decide otherwise is completely immaterial. So for that matter are their opinions because this will be settled in a court of law rather than in the public forum. We wouldn't have it any other way.

Quite frankly, it is not the people that lost money in Storm or any would be investors that need educating on this Forum, but rather those that are prone to give financial advice but have yet not come to grips with what occurred in 2008 and why the financial meltdown occurred. Until they do they will never comprehend the financial chaos banks around the world created because they were out of control and risk management played second fiddle to the bottom line. Neither will they comprehend the part banks played in that meltdown and the part the banks associated with Storm also played in the losses that Storm's clients incurred when that firm collapsed.

What also has become obvious to me is that some people that claim that they know better than we when it comes to financial matters are not across the consumer laws that govern such. If they were, they would better understand the issues at play here and we would have moved on a long time ago.

 

[doobsy]

Are you going to sue Lehman Brothers as well Frank?

 

[Solly]

When matters are next in Court

Proceedings are being held in public so anyone interested may attend.

4 September 2012
ASIC unregistered managed investment scheme proceedings
Federal Court, Brisbane
Justice Reeves
Level 7, Harry Gibbs Commonwealth Law Courts Building
119 North Quay
Brisbane QLD 4000

19 September 2012 ASIC civil penalty proceedings
Federal Court, Brisbane
Justice Reeves
Level 7, Harry Gibbs Commonwealth Law Courts Building
119 North Quay
Brisbane QLD 4000

Source: https://storm.asic.gov.au/storm/storm.nsf/byheadline/Next Court Dates?opendocument

 

[Solly]

Hi Solly,

I couldn't agree with you more!

Some on this forum just don’t get it! In fact I have come to the conclusion from reading through the recent comments of some posters that they never will which makes my efforts to explain any wrongdoings in law that have taken place somewhat pointless.

<snip>

What also has become obvious to me is that some people that claim that they know better than we when it comes to financial matters are not across the consumer laws that govern such. If they were, they would better understand the issues at play here and we would have moved on a long time ago.

Hi Frank

I sense that matters are now on the downhill run and resolution for the those affected is on the horizon. Laws are the rules that keep order in our society, they often overrule unqualified opinion and they bestow us rights. I look with great anticipation to the next phase in this saga. Sometimes when I've got some spare time and kicking back on the deck at the Broadwalk I find this refreshing reading. http://www.austlii.edu.au/au/legis/cth/consol_act/ea199580/
Maybe others would find it interesting reading as well

S