- Joined
- 21 December 2008
- Posts
- 4,532
- Reactions
- 1
"Storm trial stalls amid reaction to surprise Commonwealth Bank offer
THE start of the Storm Financial trial in Brisbane has been pushed back another week so victims can decide whether to accept a surprise Commonwealth Bank settlement struck late last week with the corporate regulator."
Storm Financial founders Emmanuel and Julie Cassimatis want ASIC case dismissed
LAWYERS for Storm Financial heads Emmanuel and Julie Cassimatis have urged a Federal Court judge to dismiss the case brought against them by the corporate regulator.
Counsel Shane Doyle, SC, attacked the Australian Securities and Investments Commission case as having "no reasonable prospects of succeeding".
ASIC calculates the total loss suffered by all investors who borrowed monies from various banks to invest through Storm to be approximately $832 million.
Someone will surely correct me if I’m wrong, but didn’t I see a figure of three billion dollars being quoted as the amount that Storm investors supposedly lost?
It’s pleasing to see that Storm directors and Storm financial advisers will not benefit from the agreement between ASIC and CBA. Nor should they – nobody could be less deserving of financial compensation than these people who promoted the highly risky Storm model as safe and conservative.
Another interesting point.....as I read it, investors have until October 17 to abandon any further court proceedings against CBA, otherwise CBA will not be obliged to pay them any compensation.
That’s less than a month – not much time for investors to make such an important decision.
All in all it looks like this UMIS thing has been a bit of a fizzer so far. ASIC would be proceeding with its UMIS allegation against CBA if it felt it could get a conviction. I think it’s a reasonable assumption that ASIC’s agreement with CBA will set the tone for similar agreements to be reached with the other banks in question.
As for CBA, I suspect that their agreement to pay out $136 million is simply the cheapest and most expedient option for them. If they refused to pay out and instead went to court, the cost to them would likely be more than 136 million even if they won the case.
More by Kerri-Anne Mesner @ themorningbulletin.com.au
ASIC calculates the total loss suffered by all investors who borrowed monies from various banks to invest through Storm to be approximately $832 million.
Someone will surely correct me if I’m wrong, but didn’t I see a figure of three billion dollars being quoted as the amount that Storm investors supposedly lost?
It’s pleasing to see that Storm directors and Storm financial advisers will not benefit from the agreement between ASIC and CBA. Nor should they – nobody could be less deserving of financial compensation than these people who promoted the highly risky Storm model as safe and conservative.
Another interesting point.....as I read it, investors have until October 17 to abandon any further court proceedings against CBA, otherwise CBA will not be obliged to pay them any compensation.
That’s less than a month – not much time for investors to make such an important decision.
All in all it looks like this UMIS thing has been a bit of a fizzer so far. ASIC would be proceeding with its UMIS allegation against CBA if it felt it could get a conviction. I think it’s a reasonable assumption that ASIC’s agreement with CBA will set the tone for similar agreements to be reached with the other banks in question.
As for CBA, I suspect that their agreement to pay out $136 million is simply the cheapest and most expedient option for them. If they refused to pay out and instead went to court, the cost to them would likely be more than 136 million even if they won the case.
Actually scrap that - further reading is the $832M is loss suffered by investors who borrowed monies. One must then assume that what makes up the other $2B lost is a mix of monies bought to the table by investors and not borrowed. I wonder if there is an allocation they have assigned to Storm as having caused loss.
The thing that I think will upset many Stormies is that if CBA are "enemy #1" and ASIC has pushed as hard as they can and are happy with 55c in the $ then the likely result for the others is that level at worst. 50 or 45% might be more likely.
Personally I think that is probably a fair reflection.
Section 12 is the interesting section. They have offset the loss by adding part of monies realised for living expenses + tax benefits etc received over the time they were in the market. As plenty were living the high life as discussed before this has now come back to bite them.
I can’t be certain, but I strongly suspect that the anonymous Rockhampton woman is none other than one of the abusive firebrands who is a member of this forum and has posted a number of times on this thread.
The person I refer to sent me and a number of other members PM’s in which she identified herself, told us where she was from, and outlined her background and the circumstances surrounding her unfortunate experience with Storm. Her language was very strongly worded and her tone very pugnacious, to say the least.
Many of her posts to this forum have been extremely aggressive and in some cases downright abusive and bullying towards other members.
Interestingly, Maccka has never once rebuked her for her bullying.
I stress again that I’m not certain that the person I’m talking about is the same Rockhampton woman mentioned in that article.
Section 12 is the interesting section. They have offset the loss by adding part of monies realised for living expenses + tax benefits etc received over the time they were in the market. As plenty were living the high life as discussed before this has now come back to bite them.
Justice Reeves is considering his response.Mr Doyle told the court the pair could not have breached their directors' duties to shareholders, as they were the sole shareholders and sole directors of a company he said was solvent at the time in question. He said if the Cassimatis had exposed Storm Financial to harm, they were entitled to do as the sole directors and shareholders.
Mr Doyle also argued that ASIC had audited Storm in 2005 - three years before the company collapsed with $3 billion in debts - and the watchdog did not raise any concerns that Storm was at risk of contravening the Corporations Act.
Here, Justice John Reeves commented that the auditor, quote "might have discharged their duties less than appropriately". He added, "I'm not saying they were".
Later, ASIC sought to persuade the court of its chances of success in prosecuting the Cassimatis for breaching their directors' duties.
Addressing the Cassimatis argument that they could not have breached their directors' duties to shareholders, as they were the sole shareholders and directors of a solvent company, ASIC counsel Peter Flanagan SC said the corporation's law applies when a director exposes a company to actual or potential harm.
doobsy,
Where you state, "As plenty were living the high life", I invite you to please cite your references and define what "high life" actually is.
S
bunyip,
I invite you to state the user name of the poster who you claim is "one of the abusive firebrands".
Then others on this forum will have clarity and certainty.
Accusations of abuse and bullying are of a most serious nature.
Bullying is a criminal act in some jurisdictions and this can then be referred.
Without clarity your post appears to be superfluous.
S
We hear repeated references to ASIC having audited Storm pre the GFC and finding nothing wrong with the business. This appears to be used as a defence by the Cassimatii.
Does anyone know what an ASIC audit entails? Do they audit the viability of the business itself, or do they look specifically at the advice they provide, and more specifically, who it is provided to?
I am guessing that in 2005 the company would have been doing quite well...the market had been good, no risk of margin calls (so no way of telling whether Storm's method of managing the risk of the portfolios was actually capable of being put into practice). Clients portfolios going up with the rising market...most clients would have been happy you would think....most people are when they are making money...and due to the effects of gearing these people would have been making more than most.
As far as I can tell, at that time, the only thing wrong with the strategy from a legal sense would appear to be appropriateness of it to the people who it was sold to. Do ASIC go through client files and dig to determine whether the strategy is appropriate for these clients? Do they review Statements of Advice and pick up how difficult it is to wade through the gobbledegook and get to the facts? And if it wasn't appropriate, how could it be proven? Clients sign every page of the SoA, Storm advisers I assume would take detailed file notes.
How can ASIC know that the clients (as many here have claimed) didn't really understand the risks they were taking, and that they thought it was a conservative strategy rather than a high risk one? Because that seems to be at the heart of the whole mess.
Does anyone know what these audits are meant to uncover?
I was involved in an ASIC audit. They provided a list of client's names, and asked for a copy of our files for those clients. File being everything we stored for that client, including SOA, Fact Find, Authority to proceed, application forms etc. etc.
I'd say with an audit of Storm they probably thought it all looked fine, as they ticked the boxes for having completed the required compliance documents. i.e. SOA, fact find, disclosure of all fees etc.
Has anyone done a calculation from the Asic deal. ie. if you have a margin loan with cba and a term deposit with cba - how is the calculated.
If you have a home loan with the cba and a margin loan - how is it calculated. Asic have been inundated and they will get back to you in five days.
Surely there is a simple formula that can be applied.
Clients of Storm who suffered financial loss as a result of a Storm investment can gain access to a secure, personal "My Storm Investment" web page.
The "My Storm Investment" web page provides Storm investors who suffered financial loss a personal extract of their Storm investment, based on information from Storm's computer system. Where you invested in Storm with other investors jointly (e.g. spouse, other family member, family trust or family company) then the information contained in this web page relates to you and those investors collectively. ASIC will be requesting investors for whom personal web pages have been provided to update their personal information. ASIC will also be sending each investor who applies to access their personal web page a questionnaire designed to verify and gather information to assist ASIC in its investigations and commercial resolution discussions.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?