Storm Financial Group

bunyip · 1 October 2012

Frank Ainslie said:
"All in all it looks like this UMIS thing has been a bit of a fizzer so far."

Your logic at times leaves me somewhat bewildered! The charge of UMIS is very real and I believe the CBA caved in because it knows this! The fact that ASIC is not now pursuing the CBA for UMIS resulted from the CBA's offer of more compensation and has absolutely nothing to do with UMIS being a fizzer. Indeed, from what I have observed in the last few days in Court, I would say that there is a very good chance that UMIS will be proven.

Frank

Maybe your idea of a ‘a bit of a fizzer’ is different to mine.
So far the only result that ASIC has achieved with its UMIS allegation is a paltry out of court settlement from CBA that amounts to nothing more than small change for this massive company that earns thousands of millions of dollars in half yearly profits.
Clearly this is a very different outcome to what ASIC was hoping to achieve with CBA.
One disgusted Storm victim described the CBA settlement as ‘two fifths of bugger all’. Judging by this and other angry comments from disgruntled Storm investors, they too appear to consider ASIC’s settlement with CBA to have been ‘a bit of a fizzer’.

Will ASIC’s UMIS allegation against the other banks turn out to be a bit of a fizzer as well? Who knows – we’ll just have to wait and see.

Frank Ainslie · 1 October 2012

bunyip said:
Frank

Maybe your idea of a ‘a bit of a fizzer’ is different to mine.
So far the only result that ASIC has achieved with its UMIS allegation is a paltry out of court settlement from CBA that amounts to nothing more than small change for this massive company that earns thousands of millions of dollars in half yearly profits.
Clearly this is a very different outcome to what ASIC was hoping to achieve with CBA.
One disgusted Storm victim described the CBA settlement as ‘two fifths of bugger all’. Judging by this and other angry comments from disgruntled Storm investors, they too appear to consider ASIC’s settlement with CBA to have been ‘a bit of a fizzer’.

Will ASIC’s UMIS allegation against the other banks turn out to be a bit of a fizzer as well? Who knows – we’ll just have to wait and see.

Bunyip,

$260 million is not small change! In fact it is a significant amount although it falls far short of what the CBA's Storm customers lost.

The problem with the amount now being offered by the CBA is that it is unclear in dollar terms what is actually being offered. From some of the remarks being made by disgruntled former CBA Storm customers, it is apparent that they neither understand what exactly is being offered or what it covers. I have read through this agreement and it is vague in some areas. Certainty is required, not guess work in such important matters. Who can blame them therefore if they reject such a nebulous offer that gives no certainty where compensation is concerned.

bunyip · 1 October 2012

Frank Ainslie said:
Bunyip,

$260 million is not small change! In fact it is a significant amount although it falls far short of what the CBA's Storm customers lost.

The problem with the amount now being offered by the CBA is that it is unclear in dollar terms what is actually being offered. From some of the remarks being made by disgruntled former CBA Storm customers, it is apparent that they neither understand what exactly is being offered or what it covers. I have read through this agreement and it is vague in some areas. Certainty is required, not guess work in such important matters. Who can blame them therefore if they reject such a nebulous offer that gives no certainty where compensation is concerned.

It's small change to a company whose half yearly profits are thousands of millions of dollars.
It's clearly a different outcome to what ASIC hoped for.
It's clearly a very different outcome to what many Storm investors hoped for.
It's clearly a very disappointing result for many Stormers.

Let's see if ASIC can do any better with their UMIS allegation against the other banks. I don't have an opinion on whether they will or won't do any better.
Nor do I really care.
I'm not the one who's getting all hot and bothered and stressed out over this - I'm just an interested and frequently amused observer.
I say the deal between ASIC and CBA has shown that the UMIS allegation against CBA has been a bit of a fizzer.
You can see it any way you want - it makes no difference to me.

Frank Ainslie · 1 October 2012

Judd said:
No Frank. We shall need to agree to disagree. I totally reject your spurious arguments. Under NO circumstances should the person signing on the bottom line and handing over their money totally abnegate responsibility. That is what you seem to be suggesting. Advice is not a decision. The decision to accept or reject advice rests with the investor.

Now off to prepare for a more exciting time to visit my daughter who is overseas. Farewell, Frank. I shall probably not think of you in my absence.

It grieves me Judd that you will not be thinking about me whilst you are away.

When you come back maybe you can explain why my arguments are spurious? I have put a perfectly fair and reasonable proposition to you and all you can do is repeat yourself. If we lived by your proposition, our society would fall in a heap because it would be lawless.

I have based my contention on the Law. You have based yours on your own view of the world according to Judd. Yours is not a pretty view because it smacks of one eyed thinking.

I'll let those with a more sensible outlook be the judge - the law as it stands or Judd's "guilty by default" law.

Have you ever thought about being a politician? With this type of thinking, you can't go far wrong!

bunyip · 1 October 2012

Frank Ainslie said:
Here we have a firm that was lauded by the Regulator as a shining light then and is now being described by ASIC's lawyer as something akin to Scientology! This has to be one of the biggest about-faces in ASIC's history!

The truth of the matter is that we should be suing ASIC as well as the Banks because they are equally to blame.

LOL!
Why don’t you then, Frank....you seem to thrive on these class actions, in fact I almost get the impression that you’ll be sorry when this one is over and this thread fizzles out and you’ll have nothing more to rant about!
What better way to save yourself from such an awful fate than to organize a class action against ASIC just to keep the legal wheels spinning!

For what it’s worth, I agree with your less than flattering opinion of ASIC. I’ve known for years about their poor track record – their incompetence was well documented in the media for years before the Storm debacle came along. Beats me why you ever thought they were a trustworthy organization whose opinion was worth placing any faith in. Maybe you didn’t read the papers or listen to the news back in those days.

Ijustnewit · 1 October 2012

Oh Dear , our Number One pot stirrer and Forum Troll is back at it again. It will be a pity when this fizzles out , they will have to go and find someone else to kick in the head while they are on the ground . sad really

bunyip · 2 October 2012

Ijustnewit said:
Oh Dear , our Number One pot stirrer and Forum Troll is back at it again. It will be a pity when this fizzles out , they will have to go and find someone else to kick in the head while they are on the ground . sad really

I’m not trying to kick Frank in the head – just having a bit of a dig at him, much the same as he had a dig at Judd. Frank dishes it out on a regular basis, he should be able to cop a bit in return.

If you want to see some real head kicking, there’s been plenty of it going on in the form of a handful of Stormers on this forum who are attempting to kick hell out of the banks by blaming them for the mess that Storm investors find themselves in.
Now ASIC is coming in for some head-kicking as well. Mind you, in their case they probably deserve it.
Maybe the banks deserve some of it too – that’s for a court to decide – but there are plenty of other causes of the Storm debacle apart from what the banks are alleged to have done.

A couple of years back it was the government who was the target of the head-kickers.....some Stormers (not all of them) blamed the government for allowing the Storm debacle to happen, and petitioned them to compensate Stormers for their losses.
Had the government been silly enough to cave in to their demands, it would have been the Australian public who took the kick in the head in the form of billions of dollars of funding being pulled from essential services such as health, police, education, roads etc, and handed instead to Storm victims.

Another example of head-kicking can be found in Post 7298 on page 365 of this thread, in which you attempted to kick the professional advisers and the banks for the bad investment decision that YOU made.

Head-kicking comes in many different forms – something to keep in mind next time before you accuse anyone of head-kicking.

doobsy · 2 October 2012

Just looking further into the compensation announcement to get my head around it for clients.

The ASIC Compensation Model also contains a method of allocating the loss suffered by an investor or investor group between the banks who funded that investor or investor group’s investments in Storm. The allocation is based on interest and fees charged by the bank to that investor or investor group for loans used to invest through Storm, and the proportion of that investor or investor group’s total Storm-related lending that was provided by that bank.

This seems to be the key statement.

We have 4 main parties by all reports - Storm, BOQ, Macquarie, CBA.

Total loss by investors = $3 billion (approx). Now part of that monies was not borrowed. What do I mean? It was equity from other sources - money in the bank (see Frank), superannuation withdrawn, sale of existing investments.

Storm were big on telling people not to own their home as that dovetailed into their "shares will outperform property" speeches and it was seen as adopting the strategy in its fullest form to sell your house and rent.

How much did this form of the $5 billion invested? I would estimate around half considering that when it all got sold down at 50% the banks got their money back - so about $2.5 billion was borrowed. The question is then are the forensic guys apportioning 50% of the losses to borrowing and 50% to investment of other monies? This would drop the figure the UMIS parties are up for to $1.5 billion if that is the logic.

The second thing it mentions is The allocation is based on interest and fees charged by the bank. This is where it gets interesting. Storm charged fees on all monies, private or borrowed. $5 billion under management = $350 million in fees. When allocating based on interest and fees charged I would think this would equate to between 40-50% of total fees generated by the UMIS parties. That makes STORM liabile for between $600M -$750M (40-50% of $1.5B) to $1.2B - $1.5B (40-50% of $3B) of the losses.

I have no idea of the breakdown of the other lending (CBA, Macquarie, BOQ) but if we look at the $268M that CBA have agreed to being 55% then the total loss aportioned to CBA is $487M. This is 1/3 of the $1.5B figure or 16% of the $3B figure. It sound about right to me.

The next question is why was ASIC happy to take 55c in the $???? Is the case as strong as investors hope?

GaryC · 2 October 2012

Hello all.

My name is Gary and I was a client of Storm Financial and the Commonwealth Bank. As it has been with many Storm clients I initially accepted the conventional wisdom that 'Storm let me down'.

I feel like a bit of an intruder coming in late on this thread however I only recently became aware of its existence and feel after having a quick scan of some of the comments that I could contribute in a positive way given my familiarity with Storm and its practices over many years as well as my distressing experiences since late 2008.

I joined Storm with a $100k investment in early 1995 after attending their workshops on 3 separate occasions before I invested. By November 2007 at its peak my portfolio had grown to $3.7M of which the amount I had actually invested from all sources including debt was $1.2M. By Dec 2008 my entire $3.7M was gone and I was left with amount still outstanding to the margin lender of around $50k not to mention still owing the bank on my housing loan.

My dilemma is this... After looking over my notes taken at the Storm workshops, I (and my lawyer) have been unable to fault anything. Similarly after having looked over my numerous statements of advice, we have been unable to fault them either. I am however still left with the feeling that I should hate Storm but don't know why. CBA did NOT send me a margin call notice as they should have done and as they did on numerous occasions in the past which allowed me to stay out of trouble. So clearly the CBA screwed me on this occasion.

As my temper cools, I am thinking that my reaction to Storm has been overly harsh.

Can somebody tell me;
- what it is that Storm did wrong, and
- what I should look for in my documentation to show this?

Gary

bunyip · 2 October 2012

Frank Ainslie said:
“So why were people sucked in by Storm and why didn’t they do their homework?” some on this forum have asked of me. Why indeed! That’s something we ‘Stormies’ will be asking ourselves for the rest of our lives.

I now firmly believe, we ‘Stormies’ should have sought a second and indeed a third opinion from other financial advisers as to the merit of Storm’s financial model and, for those that had an accountant, run it past him or her as well. Yes, it would have cost us more money and financial advice does not come cheap but with the amount of money we were investing, it would have made little difference to us. After all, if one can’t afford the small amount of money it would have cost, one shouldn’t be in investing anyway.

Often, when you consult with more than one professional you pick up some useful advice anyway in your search for the best solution to your particular needs, whatever they may be. This is commonsense after all! As it was, our failure to apply some commonsense and test Storm’s plan independently cost us all that we had in the end.

Even when dealing with tradesmen, you don’t accept the first quote submitted but obtain two or more others as well. We all know this! The fact that we ’Stormies’ never went down this path was a major failing on our part and one that is inexcusable

So my first first advice to any would-be investors out there is not to take anyone’s word for it but rather to get a second or third opinion. Someone said on this forum some time ago, “If something sounds too good to be true, it normally is!” It’s a well known maxim and one we should have been mindful of before we signed up with Storm.
Certainly, if we had sought alternative advice, the ‘high-risk” nature of the scheme and its forecasts would have been exposed as being unrealistic; something that was not self evident to us then.

Frank

I see that in some of your recent posts you’re once again plugging away with the same tired old line about how prospective Storm investors had no chance of seeing the risk in the Storm strategy if ASIC couldn’t see it.

Experienced investors have explained to you over and over the simple steps you could have taken to spot the risk. Doobsy, an experienced financial adviser and planner, has also explained it to you. But you’re not interested in listening.
So rather than waste time explaining it all over again, this time I thought I’d try a different approach by enlisting the help of a ‘pal’ of mine to give you some pointers on how you and other Stormers could have seen what ASIC apparently couldn’t see.
The ‘pal’ is refer to is none other than yourself. That’s right Frank – if you read through the quoted post above my post, you’ll see that you have done quite a good job in explaining some of the simple steps you could have taken to help spot the risk in what Storm was offering.
Enjoy!

Solly · 2 October 2012

GaryC said:
Hello all.

My name is Gary and I was a client of Storm Financial and the Commonwealth Bank. As it has been with many Storm clients I initially accepted the conventional wisdom that 'Storm let me down'.

I feel like a bit of an intruder coming in late on this thread however I only recently became aware of its existence and feel after having a quick scan of some of the comments that I could contribute in a positive way given my familiarity with Storm and its practices over many years as well as my distressing experiences since late 2008.

I joined Storm with a $100k investment in early 1995 after attending their workshops on 3 separate occasions before I invested. By November 2007 at its peak my portfolio had grown to $3.7M of which the amount I had actually invested from all sources including debt was $1.2M. By Dec 2008 my entire $3.7M was gone and I was left with amount still outstanding to the margin lender of around $50k not to mention still owing the bank on my housing loan.

My dilemma is this... After looking over my notes taken at the Storm workshops, I (and my lawyer) have been unable to fault anything. Similarly after having looked over my numerous statements of advice, we have been unable to fault them either. I am however still left with the feeling that I should hate Storm but don't know why. CBA did NOT send me a margin call notice as they should have done and as they did on numerous occasions in the past which allowed me to stay out of trouble. So clearly the CBA screwed me on this occasion.

As my temper cools, I am thinking that my reaction to Storm has been overly harsh.

Can somebody tell me;
- what it is that Storm did wrong, and
- what I should look for in my documentation to show this?

Gary

Gary,

For me, it is refreshing to hear a new voice on this forum.

Regarding your above questions, have you considered why ASIC alleges that Emmanuel and Julie Cassimatis breached their duties as directors under Australia’s corporate law?

Have you considered allowing a Silk or a Junior to run their eye over your material for an opinion?

S

Lone Wolf · 2 October 2012

GaryC said:
Can somebody tell me;
- what it is that Storm did wrong, and
- what I should look for in my documentation to show this?

Gary

I'd be very interested to hear what other ex-Storm clients have to say here. What, if anything, do you think Storm did wrong and what evidence is there to support this?

Lone Wolf · 2 October 2012

GaryC said:
My dilemma is this... After looking over my notes taken at the Storm workshops, I (and my lawyer) have been unable to fault anything. Similarly after having looked over my numerous statements of advice, we have been unable to fault them either. I am however still left with the feeling that I should hate Storm but don't know why. CBA did NOT send me a margin call notice as they should have done and as they did on numerous occasions in the past which allowed me to stay out of trouble. So clearly the CBA screwed me on this occasion.

As my temper cools, I am thinking that my reaction to Storm has been overly harsh.

Can somebody tell me;
- what it is that Storm did wrong, and
- what I should look for in my documentation to show this?

Gary

Hi Gary,

From what we (the general public) can see from the outside, the Storm strategy seems to be a valid high risk, high reward strategy. What seems to be wrong is that most ex-Storm clients on here have stated that it was sold as a very conservative strategy.

Were you (or are you) under the impression that this was a conservative strategy?

Two most basic things that I believe Storm should have done:
1 - They should have made sure you understood the risks involved. Only you can say if they did that or not.
2 - They should have actually monitored your portfolio. The market didn't dive overnight, it slid down gradually. Storm could and should have informed you of an impending margin call long before the bank ever did. There was no reason at all to rely on the bank to sell you out. I had a margin loan during that time (not through Storm), I can tell you that I knew the exact market level that would result in a margin call and I was talking to the bank before it happened. I question why Storm was unable to do this?

It appears that you are very angry at the banks for not issuing a margin call soon enough, but you don't seem to blame Storm for not monitoring your portfolio and taking action where required. Can you explain why?

Lone Wolf · 2 October 2012

While I'm in a posting mood - There are a couple of issues that I've always wanted clarity on. Perhaps this has been answered already, my apologies if they have.

- Who was responsible for informing clients of margin calls? Has the court gotten to this yet? Last I read the banks said Storm was responsible for passing on the message and Storm said the bank should do it directly.

- Apparently (I've never seen evidence) documents were falsified to make it look like clients could afford larger loans than they really could. Who filled out these documents with incorrect information? Or was this just a false accusation?

Julia · 2 October 2012

Lone Wolf said:
- Apparently (I've never seen evidence) documents were falsified to make it look like clients could afford larger loans than they really could. Who filled out these documents with incorrect information? Or was this just a false accusation?

'I have asked this on several occasions and have yet to receive an answer.
It seems a very fundamental question imo.

Solly · 2 October 2012

Julia said:
'I have asked this on several occasions and have yet to receive an answer.
It seems a very fundamental question imo.

Julia,

Do you believe that it is prudent to post material, such as what you have requested and to make accusations in a public forum? Would not these matters be better dealt with by an unbiased judiciary?

S

Julia · 2 October 2012

Solly said:
Julia,

Do you believe that it is prudent to post material, such as what you have requested and to make accusations in a public forum? Would not these matters be better dealt with by an unbiased judiciary?

S

Considering all the various accusations made by so many across this thread, I don't see that commenting on this would be any different.
I have rather had the impression that, of those Storm clients posting here, they are simply not sure who inserted their details in the application forms.

Why not also address your question to the other poster who raised this tonight?
viz from Lone Wolf:

- Apparently (I've never seen evidence) documents were falsified to make it look like clients could afford larger loans than they really could. Who filled out these documents with incorrect information? Or was this just a false accusation?

Jifromoz · 2 October 2012

Julia said:
'I have asked this on several occasions and have yet to receive an answer.
It seems a very fundamental question imo.

Page 251 posting by me. I know it was a long time ago now. BOQ said their policy was to interview all applicants.. Did not happen in this instance as they lived over 600km's away. as with a lot of loan applications they are filled out by the Bank or Broker or Storm employees. Applicants only sign the back page and never see the preceeding pages. I know this from the fact that I have copies of the application and it is riddled with simple errors that would have been corrected by my In-Laws if they had seen it. In fact according to the application they lived three houses apart in the same street. Income noted in the application had no relevance to reality present or future. Who completed this..I don't know but I know it wasn't the borrowers. Did they see this...I doubt it.

Lone Wolf · 2 October 2012

Solly said:
Julia,

Do you believe that it is prudent to post material, such as what you have requested and to make accusations in a public forum? Would not these matters be better dealt with by an unbiased judiciary?

S

Solly,

I'm not sure what you think you read or who you think said it. I seem to have a great deal of trouble with people misunderstanding me. Allow me to clarify.

Previously on this thread there were claims of falsified documents. Seeing as how the case is underway and ASIC has come to an agreement with the CBA, I simply asked what the conclusion was regarding this issue. Julia responded saying that the question remains open, and that it's an important question.

I'm not sure what your problem with this exchange is? I didn't ask for accusations or opinions, I asked for facts. If there have been no facts found as yet then a simple "The issue has not yet been raised/resolved in the courts." would have been helpful.

I realise the case is ongoing. But seeing as how ASIC has settled its case against the CBA, I had (wrongly) assumed that any claims of falsified documents would have already been investigated.

No matter, thanks to Julia I have my answer - We still don't know.

Lone Wolf · 2 October 2012

Jifromoz said:
Page 251 posting by me. I know it was a long time ago now. BOQ said their policy was to interview all applicants.. Did not happen in this instance as they lived over 600km's away. as with a lot of loan applications they are filled out by the Bank or Broker or Storm employees. Applicants only sign the back page and never see the preceeding pages. I know this from the fact that I have copies of the application and it is riddled with simple errors that would have been corrected by my In-Laws if they had seen it. In fact according to the application they lived three houses apart in the same street. Income noted in the application had no relevance to reality present or future. Who completed this..I don't know but I know it wasn't the borrowers. Did they see this...I doubt it.

Thank you Jifromoz, I hope we the public eventually find out the truth behind this. It seems an important matter to me, but somehow I fear it's going to fall through the cracks and we'll never know.

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