The usual suspects of course, Julia. Not worth loosing any sleep over it, or anything else for that matter. I've reached the situation where I simply don't care anymore.
Storm Financial Group
- Thread starter Garpal Gumnut
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The usual suspects of course, Julia. Not worth loosing any sleep over it, or anything else for that matter. I've reached the situation where I simply don't care anymore.
Julia
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You're right, of course, Judd. It's just so silly. Presumably the supposition is that - should anyone here hold bank shares - they are ipso facto bound to defend the banks. It has already been established that, even if that were not too ridiculous to be true, any payout by the banks to ex Storm clients will affect their bottom line unnoticeably.
None of that, however, will diminish the pain of those who lost money. I can understand that directing blame anywhere will probably at least feel helpful.
Yep. I made my feelings known about the matter to those financial bodies in which I hold shares but that is as far as I am prepared to go. I'm certainly not going to trash my financial situation merely to feel good in support of the angst of others.
The investing landscape is littered with investors who lost from Tulip mania, the original ponzi scheme, the Melbourne property madness of the late 1800's, Cambridge Credit, Bond Corporation, Hooker, HIH, Pyramid Building Society, Estate Mortgage, ACR, Westpoint and the 2000 tech wreck where margin loans scorched many an investor. Debt, debt, debt, debt. It will grind you to dust unless it is properly managed. It surely wasn't with Storm and there were many players involved in that game; not only the banks.
End of rant and nothing further will I be saying on this thread - for which many will probably be grateful.
Amen. It's beer o'clock guys.
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A Storm Financial update today: Bank of Queensland to pay $17m to Storm Financial clients
I wonder if BOQ’s Storm clients are happy with this outcome – it seems like a smallish amount of money relative to magnitude of the losses they must have incurred.
The size of the payout is perhaps a result the law firms and ASIC failing to bring a watertight case against BOQ to prove any illegal activity - hence the ‘acknowledgment by all parties that the bank denied any wrongdoing in relation to both proceedings.’
The size of the payout is perhaps a result the law firms and ASIC failing to bring a watertight case against BOQ to prove any illegal activity - hence the ‘acknowledgment by all parties that the bank denied any wrongdoing in relation to both proceedings.’
Julia
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It wasn't bothering those of us who are shareholders apparently, bunyip. The SP actually went up following the announcement.
Yes Julia, I noted the share price. In fact the share prices of the major banks have gone from strength to strength regardless of the payouts over the Storm debacle. It kind of adds amusement value to the silly assertions that some investors have a secret agenda to talk down the involvement of the banks in the storm shemozzle because of the fear that their bank shares will be decimated by the payouts.
As I tried to explain to HQ a number of times, companies that make billions in profits won’t be affected by payouts that amount to little more than small change for them.
I think that you will find that this is quite common in any settlement agreement. I deal with claims in my current position working for a FSP and every single deed of settlement we create states that we do not admit any liability for any wrongdoing. Even if we are in fact paying the client out on their claim.
Its just so that the settlement is full and final, there is no chance for the claimants to bring more claims in the future and they cannot say anything to the media. The BOQ would never agree to settle unless that was a clause in the deed.
I realize that. My point was that ASIC and the law firms wouldn’t have agreed to this relatively small settlement by BOQ, and certainly wouldn't have been willing to acknowledge that BOQ denied any wrong doing, if a watertight case had been presented to prove illegal activity by BOQ. They would have rejected this offer and ‘gone for the juggler’, so to speak, if they considered their case was strong enough to achieve a considerably larger payout.
Now, I’m not suggesting that BOQ and all the other banks didn’t bend some rules here and there, in fact I think it was pretty damned disgraceful of them to lend so much money on such a risky investment to people who were clearly out of their depth in regard to loan-servicing capacity.
But I always felt it was overly optimistic of ASIC and the law firms, and indeed Storm investors themselves, to believe they had a cut and dried case against the banks that would result in most of the losses being refunded.
For better or for worse, our legal system allows a considerable amount of ‘rule bending’ before it’s deemed illegal by a court of law. So it was always going to be tough to present a case strong enough to result in compensation of the bulk of Storm investor’s losses.
I’m sure the lawyers were well aware of this at the outset, but were happy to proceed anyway because they saw it as a lucrative little cash cow for their firms.
ASIC probably deserves to be sued as much as anyone, given their miserable performance in this whole sorry debacle. But suing them would have been as much a waste of time as suing Storm Financial.
Below is an extract from an article written by Paul Barry – it paints a pretty damning picture of abject failure and gross incompetence by ASIC.
The Collapse of Storm Financial
In the Eye of the Storm
By Paul Barry
It seems Storm’s clients did exactly as they were told. They stumped up cash again and again, even as the market fell. Trusting their advisers, they walked into the fire. Quite reasonably, they may also have put their faith in ASIC, which gave Storm the government’s tick of approval by licensing Manny and his boys to dispense financial advice.
Licensing is the rock on which ASIC’s regulation of the financial planning industry is founded. If you visit the regulator’s website you’ll see dire warnings of the dangers of taking advice from an unlicensed financial planner. But the experience of the Storm case suggests a licence from ASIC doesn’t necessarily make investors safe. Those who lost hundreds of millions of dollars in property group Westpoint also found little protection.
In its defence, ASIC says it can’t be expected to police everyone, but if its army of public servants were unable to notice there was something very wrong with Storm, you wonder why it’s in business. Storm was one of the biggest financial planning networks in Australia, with 115 staff, $4.5 billion of funds under management and 14,000 clients (of whom 4000 were already ‘Stormified’ and using the one-size-fits-all model of investment). The group had a highly visible and aggressive marketing campaign, with TV ads, weekly seminars and enthusiastic endorsement from the ex-Australian cricket coach John Buchanan.
Its founder was also high profile. He lived in a white, five-level house on the most prominent hill in Townsville and commuted to Brisbane in his personal Learjet. In 2007 he harvested $24 million in dividends for him and his wife. All of this was financed by the highest fees in the marketplace.
On top of this, ASIC actually received complaints about companies associated with Cassimatis and his high-risk approach in the early 1990s but did nothing. It then received further complaints about Storm in 2006 and again sat on its hands. Even in late 2008, by which time Storm’s investors had lost their shares, their houses and their super, and the company was on the brink of insolvency, ASIC still wasn’t interested. In mid December that year I rang ASIC to ask what action they were taking and was told: “We’ve had a few complaints but we’re not investigating.” They eventually got their boots on two days before Christmas 2010.
As BoQ said on the day ASIC’s legal actions were finally announced, roughly 18 months after Slater & Gordon filed its first damages suit on behalf of Storm investors, “We have every sympathy for customers who lost money … We too put faith in the regulatory system and can understand our customers’ frustration at the collapse of a financial planner that had the tick of approval from government regulators.”
On that point at least, you have to agree. It’s time for some answers on what’s wrong with ASIC and why it can’t do better.
Yeah fair enough. Cannot argue with that.
Banks Of Queensland’s payout to Storm Financial clients has been shrugged off by investors – BOQ shares rose 2.7% yesterday on the back of a record yearly profit that was up 21% on the previous years result.
http://www.theaustralian.com.au/bus...084659761?nk=3fa2997e2c8b0f76f90ecad7713d8852
http://www.theaustralian.com.au/bus...084659761?nk=3fa2997e2c8b0f76f90ecad7713d8852
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Garpal Gumnut
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I still reckon the problem lies with Financial Advisers.
They are muppets.
I wouldn't send one down to the local 7/11 for a packet of smokes. They would probably come back with Tim Tams and tell you it was better for you.
gg
They are muppets.
I wouldn't send one down to the local 7/11 for a packet of smokes. They would probably come back with Tim Tams and tell you it was better for you.
gg
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ASIC has banned Wally Fullerton-Smith for life from the financial services industry. And it sounds like he deserves it.
But how about EC– wouldn't he be equally deserving of the same penalty? It’ll be interesting to see if ASIC shows some consistency by giving him a lifetime ban from the financial services industry too.
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Given ASICs track record what does the "brains trust" think about taking ASIC to court to answer for "negligence of there duty to the Australian citizen in favour of the banks".
The argument being that ASIC gave Storm a tick of approval in December 2007 yet puts them out of business in December 2008 - is that protecting the citizen or the banks?
The argument being that ASIC gave Storm a tick of approval in December 2007 yet puts them out of business in December 2008 - is that protecting the citizen or the banks?
Garpal Gumnut
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Lest we Forget.
The Storm Victims are still suffering.
Some of the banks have capitulated.
New , younger and less experienced Financial Advisers are setting up the next generation for rip offs.
gg
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Garpal Gumnut
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Thanks Ji.
I thought I would post the full text of the Townsville Bulletin article, lest any of our ASF Members, if there are such, consider going to see a Financial Planner for advice.
Stay away from Financial Planners.
gg
