Storm Financial Group

[SJG1974]

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?

Agree 100%.

The conservative vs risky argument has gone on ever since this mess started....investors claiming it was sold as a conservative strategy yet Storm themselves have said that the clients understood the risks.

And the monitoring of the portfolios has been excused away by Storm due to the "jumbled data" coming through late in the piece, despite as you rightly point out, the market having fallen not overnight but over almost 12 months from its highs in late 2007 to margin call territory in late 2008.

Its seems from Storm's perspective, and even some of their research notes which I believe doobsy may have relayed in this forum previously, there was this flawed thinking by Storm that the market will always revert back to its long term uptrend and what we went through in early to mid 2008 was nothing more than a blip, despite the numerous events that indicated it was much more serious than that. They even kept getting clients to go back to the well and gear up further as the market fell. Then, when Lehmann Brothers occurs and the market really dives at the end of 2008, Storm put up their hands and say its not our fault, the data we get from Colonial was so jumbled we had no way of knowing what the clients' positions were.

Absolute bulldust. They were index funds, the market was going down, Storm would have known full well the portfolios were in a lot of strife. It should have been averted long before they hit margin call territory. Particularly if, as claimed, it was sold as a conservative strategy.

The banks didn't sell the strategy, nor did they charge fees to monitor clients' portfolios- that was Storm. the only monitoring the banks were required to do was to protect themselves by issuing margin calls at the right time.

In this case, by the time the margin calls were/should have been made, the clients were already down the hole and in negative equity, due to the double gearing effect. They were screwed by Storm long before the margin call fiasco, because Storm rather than protecting the portfolios from further losses by managing the position during 2008, kept clients invested (and actually increased their debt) in the blind hope that the market would turn around before it was too late. And unfortunately the rest is history.

 

[Julia]

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.

Thank you Jifromoz. You're confirming what I had previously understood, i.e. that some of the applications were filled out by "the Bank or Broker or Storm employees". In other words, no one seems clear about who actually did this.

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.

And again, it seems to me a very important point in the whole question of attributing blame for what happened.

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.

I hope not, even if for no better purpose than it clears any party which did not behave inappropriately.

 

[DocK]

Perhaps it bears repeating that some ex-storm clients have already received some compensation via the Slater & Gordon arrangement, and are prevented from discussing the basis of those payments by confidentiality clauses. So hypothetically, even if a bank had made a payment due to information filled in by a bank employee, or even a bank employee operating from an office in Storm's offices, or if it was unclear whether information had been filled in or provided by a bank employee or a Storm employee - any ex-storm client who accepted the first amount of compensation offered has essentially been silenced. Again hypothetically, a bank with exposure in this area would be smart to keep such matters out of public court hearings, wouldn't they? Hypothetically, of course.

There are obviously many ex-storm clients who did not accept the S&G deal - if I were one of them and had proof or facts that my legal reps were aware of - I daresay the last thing I'd be doing would be to show my hand on a public forum just to satisfy the curiosity of the posters.

Sometimes, when the courts are involved, the truth plays second fiddle to the deal that eventually gets done.

 

[doobsy]

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

When you say in November 07 your portfolio was 3.7M, what was the debt level? If I read you correctly you are saying that you invested (your money and borrowed money) 1.2M yet this doesn't make sense.

What makes up the 1.2M you quote?

 

[Solly]

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:

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.

Thank you Julia and Lone Wolf for your responses.
I appreciate reading the posts from those who claim to be ex-Storm clients. I have no way of verifying what is truthful or if these posters are in fact genuine. Stated "facts" without verification are just unsupported claims.
My view is that examination of these matters is better held away from public forums and safer for those involved. Unreasonable, malicious or spurious claims can cause a multitude of pain for those who make them. I believe it is better not to be placed in that position in the first instance.

S

 

[Julia]

Thank you Julia and Lone Wolf for your responses.
I appreciate reading the posts from those who claim to be ex-Storm clients. I have no way of verifying what is truthful or if these posters are in fact genuine. Stated "facts" without verification are just unsupported claims.
My view is that examination of these matters is better held away from public forums and safer for those involved. Unreasonable, malicious or spurious claims can cause a multitude of pain for those who make them. I believe it is better not to be placed in that position in the first instance.

S

That's a reasonable point, Solly, and politely expressed which is appreciated.

 

[bunyip]

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

Gary

Gary

There are a number of factors that contributed to the big losses of Storm clients. But the primary factor is that they were heavily invested with borrowed money in the stock market when the market went through one of its biggest plunges in history.
And they stayed invested throughout most of the plunge, rather than limiting the damage by getting out early in the piece before the market went into free fall.

Who concocted the risky plan that was doomed to failure in the event of a major market meltdown? STORM
Who recommended this ‘one size fits all’ strategy to prospective clients, irrespective of their personal circumstances? STORM
Who failed to do the right thing by getting their clients out of the market before the damage became catastrophic? STORM
Who gave a commitment to manage their clients portfolios, but then failed to honor that commitment during 2008 while the market was crashing? STORM
Who passed off a highly risky strategy as conservative? STORM
Who gave misleading information about the performance of certain investment classes? STORM
Who failed to explain that the trigger points would be incapable of saving clients from horrific losses in the event of a sudden market plunge such as occurred in 1987? STORM
Who failed to adequately explain to prospective clients the risk of having all their eggs in one basket by being invested in just one asset class? STORM

In my opinion, Gary, you have good reason to feel extremely angry and disgusted with Storm.

 

[bunyip]

Earlier this week, ASIC came off second best when it lost its long legal battle with Andrew Forrest of Fortescue Metals.

The Fortescue vs ASIC court case is unrelated to the current court case between ASIC and the banks who financed Storm investors. But it does serve to illustrate that ASIC don’t always come out on top when they go to court.
Now, I’m not saying they’ll lose their UMIS case against the banks. But I believe it would be premature to think that a win for ASIC is a foregone conclusion. Given that ASIC has lost many a court case, it will be interesting to see how they fare in this one.

More on the ASIC vs Fortescue Metals case can be found on this link.

http://au.news.yahoo.com/thewest/a/-/national/15012203/asic-case-against-twiggy-fails/

 

[ASICK]

Don't forget ASIC v. Jodie Rich
http://en.wikipedia.org/wiki/ASIC_v_Rich
"The trial concluded on 18 November 2009 in which Justice Robert Austin declared that ASIC had “failed in every aspect of their case”, “failed to call key witnesses” and “exaggerated the effect of evidence or misleadingly took passages of evidence out of context”. It was also decided that ASIC's summary of Mr Rich's evidence in the witness box was inaccurate."

 

[bunyip]

I assume that the avenue of appeal is open to the banks if the judgment goes against them in the UMIS case. Can anyone confirm whether or not this is correct?

 

[Solly]

"Storm collapse was triple whammy for the little people who lost all

THE Australian Securities & Investments Commission is there to protect us from the spivs, crooks, charlatans and fraudsters who operate in the corporate world.

As for Cassimatis, he is laughing. All ASIC is prepared to do, apparently, is to mount a civil case against him. He will continue to live in luxury while his despairing dupes wonder why he isn't facing a far less attractive future."

More by Graham Richardson @ theaustralian.com.au

 

[bunyip]

Agree 100%.

The conservative vs risky argument has gone on ever since this mess started....investors claiming it was sold as a conservative strategy yet Storm themselves have said that the clients understood the risks.

And the monitoring of the portfolios has been excused away by Storm due to the "jumbled data" coming through late in the piece, despite as you rightly point out, the market having fallen not overnight but over almost 12 months from its highs in late 2007 to margin call territory in late 2008.

Its seems from Storm's perspective, and even some of their research notes which I believe doobsy may have relayed in this forum previously, there was this flawed thinking by Storm that the market will always revert back to its long term uptrend and what we went through in early to mid 2008 was nothing more than a blip, despite the numerous events that indicated it was much more serious than that. They even kept getting clients to go back to the well and gear up further as the market fell. Then, when Lehmann Brothers occurs and the market really dives at the end of 2008, Storm put up their hands and say its not our fault, the data we get from Colonial was so jumbled we had no way of knowing what the clients' positions were.

Absolute bulldust. They were index funds, the market was going down, Storm would have known full well the portfolios were in a lot of strife. It should have been averted long before they hit margin call territory. Particularly if, as claimed, it was sold as a conservative strategy.

Exactly.
Storm's excuse about the allegedly scrambled data has a very hollow ring to it.
Index funds mirror the All Ordinaries Index, the performance of which is updated at least two or three times a day in the media. Getting an overview of how index funds were performing was as simple as watching the finance section of the ABC news at 7pm each day for an update on what the All Ords was doing.

Scrambled data or not, if Storm had honored their commitment to manage their clients portfolios, they would have advised their clients to convert to cash long before the supposedly scrambled data allegedly occurred. By that time the market was in freefall and clients had already suffered horrendous damage from the combination of collapsing market and heavy gearing that magnified the losses.
When the market is heading decisively south and you’re heavily invested through big margin loans, you just don’t have the luxury of hanging around and waiting for a few more weeks or months to see what will happen. Storm should have known this, and taken action early in the bear market to protect their clients from big losses.
Storm has no reasonable excuses.

 

[bunyip]

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.

Gary

Did the conditions of your margin loan state that CBA would advise you of margin calls? If so, and CBA failed to do so, then you appear to have grounds for compensation from CBA.

Why I’m asking is because someone posted on here the conditions of their margin loan - unfortunately I can’t find the post to give you the exact wording – but I recall one part of it stating that it was the client’s responsibility to monitor their position, including margin calls.

Also, shouldn’t Storm have kept themselves abreast of the situation and notified their clients as soon as they hit margin call? I know Cassamatis is now saying that advising clients of margin calls was the bank’s responsibility, not Storm’s.
But Storm said on their website that they monitor their client’s portfolios – one would reasonably assume that this would include monitoring margin calls.

 

[Frank Ainslie]

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

Hi Gary!

Look back through my past postings or go to my websites if you can't find anything wrong with the advice Storm gave or its motivation for doing so.

Frankly, I find it hard to believe that anyone by now that had any interest in this would be unmindful of Storm's transgressions because they have been broadcast far and wide. I find it particularly incredible that anyone connected with Storm and lost a great deal of money through doing so would still be asking such a question?

I suggest that you review the evidence that will be presented in Court carefully because it will demonstrate the part Storm had in all this! I know! I was there! I together with thousands of others can fully vouch for Storm's duplicity!

The evidence is out there and is freely available. I suggest that you avail yourself of such!

 

[Frank Ainslie]

And this is where we diverge again.

Most Storm clients say they thought this was a safe, conservative strategy. While I can accept the argument that Storm clients didn't feel the need to do their homework due to trusting in the expertise of their advisors, I can't for a moment believe the claim that Storm clients thoroughly researched the strategy themselves. It doesn't take many calculations to work out the potential risks of borrowing large sums of money to invest in an instrument that has previously had sudden and severe falls.

If you were after higher reward and were willing to tolerate higher (but controlled) risk I could possibly understand. If you trusted your adviser and didn't do your own research I'd understand. But I can't imagine what could possibly convince you (after thorough research) that this strategy was conservative. So we'll have to agree to disagree on that. However, I will end by saying that this is only my opinion which is based on what I now know. I wasn't there to hear exactly what lies you were told or what research you really did. So although I have my own opinion on the matter, I do have to admit that I could be wrong.

Once again Frank, disagree as we might, I honestly do wish you well and hope that there comes a time when everyone affected can put this behind them and move on with their lives.

Thanks! If we all agreed with one another, life would be boring! People have a right to their opinion. Discussion is good as long as it remains healthy. Good luck to you as well!

 

[Frank Ainslie]

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.

Hi Bunyip,

How many times have you been kicked in the head? A great number I would think judging from you comments in relation to governments and banks.

You claim to have a lot of financial nous. Let's hope it doesn't match your nous when it comes to institutions that are ripping people off every day. You asked me whether I read the newspapers! Do you? If you did, you would not be insulting our intelligence with statements that have no bearing on the facts at large.

For goodness sake, get real and post something that you didn't find in a Christmas cracker. It may give us food for thought rather than dull our minds with the same old dribble.

What part of "THE BANKS AND STORM HAVE BEEN CHARGED WITH WRONGDOINGS" don't you understand? How many times must we repeat it until it sinks in or are you one of these conspiracy nuts that thinks that this is just another conspiracy!

Do you know what a wrong is? It means:
1. Not in conformity with fact or truth; incorrect or erroneous.
2. a. Contrary to conscience, morality, or law; immoral or wicked. b. Unfair; unjust.

If nothing else, at least invest in a dictionary. It should help you to understand the words that will be used in Court over and over again. But then I forgot, it's all a conspiracy anyway!

 

[Frank Ainslie]

Don't forget ASIC v. Jodie Rich
http://en.wikipedia.org/wiki/ASIC_v_Rich
"The trial concluded on 18 November 2009 in which Justice Robert Austin declared that ASIC had “failed in every aspect of their case”, “failed to call key witnesses” and “exaggerated the effect of evidence or misleadingly took passages of evidence out of context”. It was also decided that ASIC's summary of Mr Rich's evidence in the witness box was inaccurate."

Hi ASICK!

From the way ASIC is proceeding so far I think it has already lost its way! It's a worry and no mistake!

 

[Frank Ainslie]

Earlier this week, ASIC came off second best when it lost its long legal battle with Andrew Forrest of Fortescue Metals.

The Fortescue vs ASIC court case is unrelated to the current court case between ASIC and the banks who financed Storm investors. But it does serve to illustrate that ASIC don’t always come out on top when they go to court.
Now, I’m not saying they’ll lose their UMIS case against the banks. But I believe it would be premature to think that a win for ASIC is a foregone conclusion. Given that ASIC has lost many a court case, it will be interesting to see how they fare in this one.

More on the ASIC vs Fortescue Metals case can be found on this link.

http://au.news.yahoo.com/thewest/a/-/national/15012203/asic-case-against-twiggy-fails/

Hi Bunyip! You again!

"Now, I’m not saying they’ll lose their UMIS case against the banks. But I believe it would be premature to think that a win for ASIC is a foregone conclusion. "

Has anyone mentioned that a win against the Banks is a foregone conclusion? Anyone that believes that is off their chump! We know exactly what we are up against and are relying on our own lawyers rather than ASIC to reveal the truth. If we had left it to ASIC we would have all jumped over a cliff long ago!

 

[Frank Ainslie]

More by Graham Richardson @ theaustralian.com.au

Hi Solly,

The Regulator has such an important function to perform in the financial world and yet it fails us at every turn. Public apathy where ASIC is concerned doesn't help either. It's the same old story!

"Unless, ASIC does something wrong that doesn't affect you directly, why give a stuff!" It's human nature! People will talk of course but when it comes to taking action, it's just all too hard!

That's the way of it, I'm afraid. It always will be until someone in power does something about it. At the moment our Government and the Opposition seem more intent on point scoring than running the country efficiently by ensuring that bodies such as ASIC are administered efficiently.

Until I came to this country I never knew what the word "rooted" meant when it's used in a certain way by ordinary Australians. The word seems apt now though when describing ASIC.

 

[bunyip]

Hi Bunyip,

How many times have you been kicked in the head? A great number I would think judging from you comments in relation to governments and banks.

You claim to have a lot of financial nous.

I’ve never claimed to have ‘a lot of financial nous’.
I’ve simply stated that I’ve made it my business over the years to get myself reasonably knowledgable in financial and investment matters. And that I try to think for myself and use common sense when dealing in same.

I’ve never claimed the banks are squeaky clean. I’ve said they should be penalized if they can be proven in a court of law to have done anything illegal. I’ve stated that I personally don’t like banks, I feel they’ve ripped me off at every opportunity and continue to do so to this day.

I’ve never claimed the government is squeaky clean either, or that they can’t or shouldn’t improve laws and regulations relating to investment.

What I do claim though is that no amount of laws or regulations will eliminate every crook who’s selling a dodgy investment scheme. And no amount of laws and regulations will prevent people from getting caught if they don’t thoroughly look into an investment proposal before committing all their money and loads of borrowed money to it. If people are going to take crazy risks in an effort to dramatically boost their financial position, as you did, then they’ll come unstuck sooner or later..........just like you did.

You love to portray me as a dumb bastard, don’t you Frank? No problem – I’m happy to be the dumb bastard who made excellent money in 2008 thanks to the same plunging stock market that sent you broke.