Storm Financial Group

[Solly]

The last few paragraphs of this article

http://www.townsvillebulletin.com.au/article/2008/12/24/29831_business_desk.html

says that there are many rumours about what is happening and also ASIC would not confirm anything.

Has anybody got any further verified news about what is happening ?

 

[Solly]

The Storm Financial Website http://www.stormfinancial.com.au
has been "under maintenance" since Monday.
I wonder what is happening? Will it be back?

The web site http://www.stormfinancial.com.au


now says it's only temporarily unavailable due to maintenance over the xmas break...

Solly

 

[Solly]

ABC now reports:

"ASIC to probe troubled Storm Financial"

ASIC is examining advice the Townsville firm gave to clients in relation to margin loans...

Story here:
http://www.abc.net.au/news/stories/2008/12/24/2454843.htm

It will be interesting to see the results of their investigation.

 

[Garpal Gumnut]

ABC now reports:

"ASIC to probe troubled Storm Financial"

ASIC is examining advice the Townsville firm gave to clients in relation to margin loans...

Story here:
http://www.abc.net.au/news/stories/2008/12/24/2454843.htm

It will be interesting to see the results of their investigation.

ASIC have a long record of underperformance when it comes to protecting investors.

A number of questions I might ask of ASIC's involvement.

1. Why now. Blind Freddie knew this mob's algorithm was a recipe for disaster 12 months ago.

2. Where. Where will they find the documents, people to investigate properly, many like a mate of mine are too ashamed to admit their involvement.

3. How. The best predictor of future behaviour is past behaviour, ASIC are a joke.

4. When When most people have lost the lot, the bad guys have shifted money offshore and most folk have forgotten....about 2013 imho.

gg

 

[Solly]

ASIC have a long record of underperformance when it comes to protecting investors.

A number of questions I might ask of ASIC's involvement.

1. Why now. Blind Freddie knew this mob's algorithm was a recipe for disaster 12 months ago.

2. Where. Where will they find the documents, people to investigate properly, many like a mate of mine are too ashamed to admit their involvement.

3. How. The best predictor of future behaviour is past behaviour, ASIC are a joke.

4. When When most people have lost the lot, the bad guys have shifted money offshore and most folk have forgotten....about 2013 imho.

gg

I just got this like sent to me ..

http://www.skynews.com.au/business/article.aspx?id=289675

SF appear to be taking action against Comm Bank.... what could have Colonial done to warrant this response from SF?

 

[Garpal Gumnut]

I just got this like sent to me ..

http://www.skynews.com.au/business/article.aspx?id=289675

SF appear to be taking action against Comm Bank.... what could have Colonial done to warrant this response from SF?

And this illustrates why ASIC are impotent, any cowboy from the Blackhall Ranges can derail the process.

Storm Financial investors, stick your heads between your legs and kiss your investments goodbye.

gg

 

[Glen48]

Sad part is if there is not another one running some where there will be soon.
The CEO's put all the assets in their wife's name yet the wives stick with them look at Adler?????
Until the head scammers and their Wives are sent broke they will continue all with the legal system ASIC , ACCC blessing.

 

[Glen48]

We should start using their correct name..Storm un-financial Group or Down the S/Shute...or Australians effort in the Ponzi Games
USA Score Made off ..1.... Australia.... 0

 

[Garpal Gumnut]

Sad part is if there is not another one running some where there will be soon.
The CEO's put all the assets in their wife's name yet the wives stick with them look at Adler?????
Until the head scammers and their Wives are sent broke they will continue all with the legal system ASIC , ACCC blessing.

We should start using their correct name..Storm un-financial Group or Down the S/Shute...or Australians effort in the Ponzi Games
USA Score Made off ..1.... Australia.... 0

Don't worry mate, it will all work itself out

gg

 

[Solly]

And this illustrates why ASIC are impotent, any cowboy from the Blackhall Ranges can derail the process.

Storm Financial investors, stick your heads between your legs and kiss your investments goodbye.

gg

You've said that you have a few mates who use them, are any of these in real trouble?

After reading the ABC story it seems that it's only an issue of $20M not the $1Billion I read about elsewhere.
Or is this an over simplification of the total situation?

 

[Garpal Gumnut]

You've said that you have a few mates who use them, are any of these in real trouble?

After reading the ABC story it seems that it's only an issue of $20M not the $1Billion I read about elsewhere.
Or is this an over simplification of the total situation?

None in real trouble, real trouble is losing your house.

I doubt if its just $20m, I have heard of one bloke who leveraged $7m into a $20m debt, but whether its all talk or not I do not know in his case.

$20m is bugger all money in North Queensland so I doubt if that figure is true.

gg

 

[awg]

It would seem unbelievable that anyone geared at 50-70% into the ASX200 index funds would have taken no action, cause if they didnt, they would be well into margin.

The precipitous falls since late October would have done it.

Surely you would expect a written warning from your FP, if you had 50% gearing, you would now be worth $0, if you had been invested 12 months or longer, even if you had quadupled over the previous 4 years.

You can bet your balls that the principals of Storm, have "diversified" their assets.

You can be fairly certain that Colonial would have been within the legal guidelines to liquidate, and would have done so because either margins were touched, or so close that some protective clause came into play, to ensure they didnt get stung due to liquidity/risk issues over the xmas period.

I would also suspect Storm Group themselves would be effectively bankrupt due to redemption requests and excessive "costs". I doubt their employees would be enjoying a financial xmas

 

[Solly]

None in real trouble, real trouble is losing your house.

I doubt if its just $20m, I have heard of one bloke who leveraged $7m into a $20m debt, but whether its all talk or not I do not know in his case.

$20m is bugger all money in North Queensland so I doubt if that figure is true.

gg

Reading further ASIC says at 12/12 there were over 450 clients who owed their margin lender more than the value of their portfolios, equating to approximately $30 million owing, now it appears that there are approx 300 clients with a total of $20 million owing. So 150 clients could have cleared down there margin loan but I suppose there is a posibility that some may still have issues with debt/equity loans that are still over assets/homes. I suppose this double grearing needs experience to handle it correctly. I'm not brave enough for this strategy.

 

[Julia]

Sad part is if there is not another one running some where there will be soon.
The CEO's put all the assets in their wife's name yet the wives stick with them look at Adler?????
Until the head scammers and their Wives are sent broke they will continue all with the legal system ASIC , ACCC blessing.

This is a really good point. The legislation should be changed to include funds in the names of any family members or trusts involving family.

 

[Sunder]

This is a really good point. The legislation should be changed to include funds in the names of any family members or trusts involving family.

There are already laws that do something to protect against that.

If you transfered money to your wife (Husband in your case), 10 years ago, then the court determines that the money is not involved in any fraud or failure.

However, if you transfered funds 6 months ago to your husband, and there is no clear reason why you did it (tax reduction, balancing of assets etc), then the courts can determine that the transfer were for the sole reason for putting them out of the reach of creditors, and the court can order those transactions reversed.

Unfortunately, including family and friends can also open a can of worms. What if your brother gave you a $1m house as a birthday gift. You had no idea there was anything dodgy going on, and in fact, your brother told you he was raking in hundreds of millions and this was just a gift to celebrate that.

You sell your house, move in, live it up big on the money from the sale of your old house, then 6 months later, the repo man takes your house and kicks you out on the street with nothing.

How's that different from a dodgy CEO who transfers a house to his brother to put it out of the reach of creditors, and once everything is settled, he wants it back, perhaps with a small "gratuity" for looking after it? (or rather, how does that look different to a judge who determines whether to confiscate assets or not).

 

[Monario]

Some points.

1) I personally know of people who are losing there homes, one of these people is a family member. Our whole family was invested with storm. 4 seperate families. What it has done to our family, and others is devastating.

2) Storm sets up personal mortgages, invests the borrowings in the market and gears against it. When the investment failed the debt on the house is left to the investor.

3) The people who say it is the investors fault have no idea of storms management techniques, nor the way they deal with there customers.

And as a note of interest, I asked all the appropriate questions in relation to the risk, and the possibility of the market doing just what it has. My adviseor now says he wishes he had listended to my concerns a little more. A LITTLE MORE!!!

Luckily I have written advice, diary entries of communications, and recording of some descussions. In case we ever end up in some form of litigation.

4) At some stage we will end up in some form of litigation.

5) The people who remain loyal storm customers are mad. They possibly do so in ignorance of their current position. And when june next year comes and the prepaid portion of their margin interest runs out, will recieve a nice $1000 a day interest charge(actually proportional to the loans, some will be much higher.). I also know personaly of a few such people and they are in the belief "STORM WILL FIX IT"...

Storm were stating they would find a way for these people to reinvest the margin loan, I almost immediately realised that without a further injection of cash the lenders would not release the funds, and with most people already mortgaged to the hilt where would the funds come from? Not to mention when to reinvest with such a risky lending ratio!

One of my familiy members was in such a position, and decided to payout the loan at a loss (negative equity) on the premise they will at least get a refund on part of the interest. This has given them a little more time to get the house in order for sale. On the day the decision was made to do this the founder of Storm himself was personaly asked the question of what to. No reply was given!

I also know of some investors who have recieved letters stating Storm would recover their lost funds through future Storm profits/commisions to help them get back in the market. Were not holding our breath. I can only see this as a form of damage control, after all if they dont find a way to help, the bad press alone would be enough to send them under... A form of enforcable undertaking you could call it... Like I said we are not holding our breath.

6) Australia has not yet seen onshore losses, over the next 6-12 months australia will see a massive downturn in mining, and further losses on the dollar due to foreign investors moving offshore. Driving our markets down further. Which should be ringing loud bells of warning for any new Storm clients.

7) Due to the types of commodities and investments Australia offers we will however be amongst one of the first to pull out of the downturn. Inherent with this is the fact that Australia was one of the last to go down.

8) Expect a downturn in realestate, particularly in the mining areas, Perth will be hit hard, as will most of W.A. This will further effect Storms Model.


Please note statements 6,7,& 8 are "MY OPINION" I am not an advisor of any kind. I will answer any questions on 1-5 to the best of my ability without revealing any personal information, so please ask away, there appears to be many people with questions.

 

[chops_a_must]

And as a note of interest, I asked all the appropriate questions in relation to the risk, and the possibility of the market doing just what it has. My adviseor now says he wishes he had listended to my concerns a little more. A LITTLE MORE!!!

What was his actual response when you asked this?

 

[Monario]

What was his actual response when you asked this?

That, this is the best way for us to proceed, it is a safe step, we are running with safe margins/buffers etc. and then when the market started to fall I asked should we sell out while we have profits and restructure. The answer was no. Infact, I asked this question at the last update, given the time again and in the future would they be doing things differently? ie. selling when reasonable profits are available. The answer was No! and that when you have profits, you should borrow against them, and when the market is down find what cash you can to put in... Like we have an unlimited supply or something.

Storm were very big preachers of having a dam! or pool of money(CASH). And as the investment grows, to build this in the good times. However everytime we rasied that question they would somehow find ways for us to borrow more money, or No its not a good time to sell, the market is moving up why sell, the market is down, always some excuse. After all this went down, I found out that storm get paid commisions from the lenders, than it became more clear, if they sold a client down, so to would there commisions deminish.

I only found out that I was in trouble with my investment when the Margin lender, NOT my advisor, rang and asked if I knew I was in a margin call, I did not. They then told me I had infact been in Margin call for 6 weeks... At this point I was given paper work for a 50% sell down to transfer ito cash by Storm, the next day I asked was this a big enough step to secure, new paperwork was drafted for 100% and I personally went in to sign it, I asked if they had sold down the other 50% and they said No. I asked why and when they would and they told me they would do so at their discretion.. Not what one likes to hear from an advisor...

 

[Solly]

I only found out that I was in trouble with my investment when the Margin lender, NOT my advisor, rang and asked if I knew I was in a margin call, I did not. They then told me I had infact been in Margin call for 6 weeks... At this point I was given paper work for a 50% sell down to transfer ito cash by Storm, the next day I asked was this a big enough step to secure, new paperwork was drafted for 100% and I personally went in to sign it, I asked if they had sold down the other 50% and they said No. I asked why and when they would and they told me they would do so at their discretion.. Not what one likes to hear from an advisor...

I found this link on a Fairfax news site, this apparently is a copy of a letter sent by Storm advising what you described above.

http://www.theage.com.au/ed_docs/Letter.PDF

If I received something like this I'd definitely be seeking another opinion. This to me is scary advice, not something I'd welcome.

How could you be in a margin call situation for 6 weeks and not know about ?
There must be a duty to disclose this to you in a 'reasonable' time frame. My expectation is that a Finanicial Adviser, who is getting paid handsomely would have my best interests at heart and would have these issues all in hand..

Although I have seen on a Colonial Margin Loan T&Cs that says:

Clause 4.4
You are responsible for:
(a) monitoring your portfolio and determining when your loan is
subject to a margin call;

Clause 4.3 also says
(a) You agree that we may provide notice of margin call by any
or all of the following ways to you or your Client Adviser:
• In writing (including by fax, email or other electronic
means)
• Orally, including by telephone

I believe that this is all getting more complicated than it ever needed to be.

 

[chops_a_must]

Ouch. I feel really sorry for you.

Unfortunately, the finance industry is not there to serve you.

And a lot of people here, that work in it, and are planning to work in it, are going to have an almighty shake up, as some of the things that have been perpetrated are beyond comprehension.

Just a shame as a lot of people here, with a basic understanding of investing, would have been able to give you much more worthwhile advice, and certainly actually understand risk.

I don't actually know why financial advisors exist to be honest.