Storm Financial Group

stung said:

We did not see any one from the Comm Bank when we applied for our investment loan. We were interviewed by Storm and they applied on our behalf.
I applied to the bank to have a copy of the form and it arrived today.
This form has been filled in by Storm and does not contain our signatures.

There are a few anomalies but I do not know whether they are significant or not.

1) When we provided proof of income I asked that mine be downgraded on the loan application because I had a larger than normal income that year and that income would not continue. The higher income was listed on the submitted form.

2) No dependent children were listed yet we have one and he is very costly due to a chronic illness.

3) No other personal debts are listed yet I told the advisor that I owed my Mother $25 000.

4) Under a column entitled other income, $1 850 a month is listed yet aisde from our wages we have no other income at all. I have no idea where this figure has come from.



I have now come to terms with my heavy debt ($630 000) and admit that I was financially naive when it came to margin loans but I will never let Storm off the hook because they told us so many lies. I still hate them.

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I'm very surprised by these comments. It would astound me if the bank agreed to create these loans without a signature from the client. If this is indeed true then the banks certainly should bear significant responsibility but I suspect that somewhere along the line the client will have signed something.

The fact that the mortgage brokers/Storm have knowingly put false or misleading information (with or without the clients approval) would not surprise me as this happened all over the place in the US by the sounds of it, and my experience with mortgage brokers tended to be that many were gung ho. But the banks accepting documentation unsigned by the client - that would be quite astounding - and would almost certainly make the contracts null and void (I'm not a lawyer - but a contract with no signature isn't a contract).

They have such stringent procedures around the loan creation processes and document check processes that I can't imagine it being the case - but *if * somehow this was all short circuited through some 'matey' relationship with Storm then that would be scandalous and worthy of some serious govt and legal attention.

Were the documents signed by the Storm advisers on your behalf? Wonder how they got processed by Colonial Margin Lending without them...

The scary thing is where are the financial advisers that use to work for Storm now? I'm sure some would've jumped ship before the collapse and perhaps moved to one of the Big 4 banks?

Calls to secure passport of Storm Financial's Emmanuel Cassimatis

"As creditors of Storm Financial count the cost, founder Emmanuel Cassimatis is facing calls to surrender his passport to prevent him fleeing overseas.

Devastated former clients, mostly retirees and many who have lost their homes and entire life savings in the $100 million collapse of the Queensland-based business, also want him banned from obtaining a new financial licence."

"His private jet has been seized by liquidators and he says he has only "modest means", despite paying himself a $2 million dividend shortly before the collapse."

Peter Michael's story is here;

http://www.news.com.au/couriermail/story/0,23739,24980495-3122,00.html

cuttlefish said:

I'm very surprised by these comments. It would astound me if the bank agreed to create these loans without a signature from the client. If this is indeed true then the banks certainly should bear significant responsibility but I suspect that somewhere along the line the client will have signed something.

The fact that the mortgage brokers/Storm have knowingly put false or misleading information (with or without the clients approval) would not surprise me as this happened all over the place in the US by the sounds of it, and my experience with mortgage brokers tended to be that many were gung ho. But the banks accepting documentation unsigned by the client - that would be quite astounding - and would almost certainly make the contracts null and void (I'm not a lawyer - but a contract with no signature isn't a contract).

They have such stringent procedures around the loan creation processes and document check processes that I can't imagine it being the case - but *if * somehow this was all short circuited through some 'matey' relationship with Storm then that would be scandalous and worthy of some serious govt and legal attention.

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The loan contract setting out the terms and conditions of the loan was signed by us but not the 7 page income/debt data collection form.

boundless said:

You can't say things like this and get away with it. Don't be surprised if you get sued for defamation.

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Gee suing me would be a worthwhile exercise!

Storm victim bailout unlikely

"A RESCUE package for battered Storm Financial clients will be considered but the State Government is unlikely to bail out victims of bad investment advice, Premier Anna Bligh says."

http://www.cairns.com.au/article/2009/01/30/25971_local-news.html

3000 Storm homes to hit market

"Townsville-based economist Carey Ramm, from AEC Group, predicted about 1500 to 1600 of those properties would be in Brisbane.

Mr Ramm, who attended Wednesday night's meeting of former Storm Financial investors in Townsville, has been advising the financial planning firm's investors since before it collapsed early this month.

He said 800 homes may have to be put on the market in Townsville, with up to 300 homes in jeopardy in Cairns, and 200 each in Mackay and Brisbane."

http://www.brisbanetimes.com.au/news/queensland/3000-storm-homes-to-hit-market/2009/01/29/1232818629888.html

cuttlefish said:

They have such stringent procedures around the loan creation processes and document check processes that I can't imagine it being the case - but *if * somehow this was all short circuited through some 'matey' relationship with Storm then that would be scandalous and worthy of some serious govt and legal attention.

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Cuttlefish i think u may be catching on to some of the "irregularities" that are poping up in the loan documentation of many clients.

I have seen documents for loans whose validity is clearly in question.

I would urge all storm clients to request copies of their loan applications from their home loan and margin loan providers and check for "irregularities" and if unsure what they are looking for contact a lawyer (i am aware that both slater and gordon and connolly suthers are asking all the people who have contacted them to do this).

A quote from todayS SMH article by Michael West.

Storm and CBA had enjoyed a ''fruitful and strong relationship spanning 20 years'' wrote Cassimatis and the ''intertwining of our businesses ... has placed the relationship squarely as a very large disadvantage or positive opportunity depending on the outcome of discussions between you and us''.

He goes on to discuss the ''very profitable'' relationship in which CBA had ''intimate knowledge of Storm's process and credit sign-off, CBA is Storm's largest supplier''.

hmmmmm.... credit sign off.

carey ramm said:

A quote from todayS SMH article by Michael West.

Storm and CBA had enjoyed a ''fruitful and strong relationship spanning 20 years'' wrote Cassimatis and the ''intertwining of our businesses ... has placed the relationship squarely as a very large disadvantage or positive opportunity depending on the outcome of discussions between you and us''.

He goes on to discuss the ''very profitable'' relationship in which CBA had ''intimate knowledge of Storm's process and credit sign-off, CBA is Storm's largest supplier''.

hmmmmm.... credit sign off.

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Here's the link to the full article that Carey refers to above;

http://business.theage.com.au/business/storms-death-throes-20090128-7s1c.html

(Carey it's great to see you're still visiting the forum )

Monario said:

A crap load? less the $270 a fortnight.

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Yes a crap load, in todays dollars (remember their is also some indexation) $270 x 26 x 15 (years) x (say 400 Storm clients ) = $42 million and change and that's just an arbitrary 400 from Storm, let alone the rest that will have a reduced income stream from Storm and be entitled to a part pension as well as the rest of the nation in the same boat eg retirees on fixed income streams from term deposits are going to be hit hard as well, they too will start to get the pension as their term deposits mature... more welfare money needed Those on welfare already had $10 Billion thrown at them last month, how much more a largess do you want from that tax payers pockets ?

Monario said:

And clearly as we see today, and in recent time supporting them also leads to job losses...

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Agreed. In some instances, yes some intervention I think is necessary, or it will be a total rout and MORE of joe q public will suffer.

Monario said:

to learn and understand why there are so many flaws in the system that never seem to be fixed.

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Why ? That one's easy, incompetent Government, we get the Government we deserve. EVERYONE has to realise that surley, especially retirees, they have decades more experience of it then I. You can't look to Government for the solution, they are the problem, you have to do that for yourself (nor offload the single most important fiscal decisions of your life to someone else, hell I don't let other people choose what I am have for breakfast, let alone where to invest my hard earned). If people want to keep voting incompetent Government in (and we have been for as long as I have been around) this is the result of that... who to blame, look in the mirror... look at the latest "leader", a full time politician, never worked a productive day in his life and his claim to fame is being a member of the clerical union and yet people still voted for him and his band of merry men... the out come is know before the race is one and yes Howard was just as bad, as was Keating, Hawke, Fraser, Whitlam etc before them

Monario said:

I have and am in the process of talking with them on these and other issues.

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Good for you, but blaming overpaid executives seems a strange way to support them. "Blame" your federal minister and get Government to cap executive remuneration packages if that's your beef. I too agree they are overpaid, like Kloopers of BHP and a plethora of others.

Monario said:

The shoes would happen to be those of a company CEO..?

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Well, I am CEO of my own company, not a very big one mind you if that helps ?

Old mate Chris Skase applied to the court to get his passport backs so he could go over seas and the PP on the bench asked him how much money he had Chris told him $1,300 ( commonsense tells you you won't go far on that amount ) yet the PP gave Skase his passport back and we know the rest.....

carey ramm said:

Cuttlefish i think u may be catching on to some of the "irregularities" that are poping up in the loan documentation of many clients.

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A few of us have mentioned that already eg

https://www.aussiestockforums.com/forums/showpost.php?p=390580&postcount=706

and that doesn't mean I am not interested to find out why the bank lent them funds with such a crappy income stream ie where there falsehoods on the submitted documentation or was the bank lax in their lending practice ?

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Monario said:

A crap load? less the $270 a fortnight.

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Might be good to check your facts.
The age pension is around $580 per fortnight. Rent assistance is also available to people who do not own their own homes and are renting.
In addition there are substantial discounts off electricity, rego, prescriptions, and many other things.
Obviously this is still a very low income, but it's decidedly better than you are trying to suggest. Many thousands of people have been getting by on it for many years.

As a former Storm client i dont remember actually providing any evidence of my wages or extra income. We provided a bank statement to prove we had an iniatial investment amount (proceeds of a house sale) and gave verbals of wages. After the initial paperwork any additional steps (storm speak for extra investment via margin loans) were in the form of several one page forms for us to sign plus a bigger statement to initial that outlined the process. However after having recently borrowed money for both house and car loans the paperwork we received to borrow margin loans required only one signature whereas the home and car required multiple. It does seem very possible to me that the loan documents might be fishy and if thats the case both storm and the banks have to be held responsible for potentially shoddy loan approvals. However i still maintain that individual investors are responsible for there own losses. People who are scratching their heads wondering how they ended up with so much negative equity need to take responsibility for their own finances. I would check the value of our storm badged challenger investments several times a week against the value of our margin loans. Once the difference between the two got close to the level where we would start to have less left over than our initial investment amount we decided to get out. I should also mention that a year peviously we wished to cash out once we had more than doubled our initial investmant amount but were very firmly discouraged not to. You would go into your meeting with a stratrgy in mind and they would talk you out of it. If people paid attention to their investments which you are an idiot if you dont do even if only in a casual fashion then there is lees chance they would be in this predicament We set our selves a limit of what we were prepared to lose and that was out initial investment amount it turns out we ended up with about 10% more in the end. It is a tragedy for everone involved but it seems to from reading the papers and the internet that very few people involved be it clients, FA's, banks ot the Cassimatis's are willing to take responsibility. I freely admit that i loved the tax perks involved in having big tax deuctions for my investment loans and so would every other storm client. Life is not easy and no-one gives you anything for free but ultimately the buck stops with us for our individual choices

Julia said:

Might be good to check your facts.
The age pension is around $580 per fortnight. Rent assistance is also available to people who do not own their own homes and are renting.
In addition there are substantial discounts off electricity, rego, prescriptions, and many other things.
Obviously this is still a very low income, but it's decidedly better than you are trying to suggest. Many thousands of people have been getting by on it for many years.

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Here is the reference for aged and service pensions if anyone is interested-

http://www.dva.gov.au/factsheets/documents/IS21 Service Pension & Age Pension Rates.htm

Could somebody answer this question for me please: if a Storm investor gave clear instructions to a Storm representative that a stop-loss should be set on their account at a certain level (meaning that all shares should be sold, converted to cash until further notice) and the Storm representative agreed that this would happen but then it transpired that the sell-down did not occur, then who takes the blame for subsequent losses? I have heard of Storm investors for whom this is the case and if their instructions had been followed they would not have had the rug pulled out from under them by the bank in December. Their instructions were given long before the bank put a freeze on withdrawals and Storm came up with a string of excuses for it not happening, but the bottom line is that investors gave clear instructions which were not implemented and the result has been catastrophic losses.

As I see it, either Storm took a deliberate decision to not implement the stop, or Storm tried to do so but the bank did not follow instruction, or Storm and the bank colluded to ensure that the sale did not take place – under any scenario I would have thought that it is a bit harsh to be accusing these investors of greed, laziness, lack of self-education, a desire to sponge off the taxpayer or any one of the other accusations that seem to have been levelled by some contributors to this group.

A fact to take into account when thinking about this issue: Storm sent a letter to investors dated 8-October advising that shares should be liquidated – turned into 100% cash – with a view to holding that cash until the market showed signs of recovery and then buying back in. That was official, documented Storm advice, widely reported in the press and given at a time when the market was some 1,000 points above the level at which the bank shut investors down, about 2 months later. Since Storm gave that advice at that time and investors agreed, how do we account for it not happening? More importantly, should this not form the basis for a claim against somebody, the loss involved being easy to calculate as a function of the drop in portfolio value between instruction to sell and shut-down by the bank?

It may be worth summarising some lessons from this debacle.

1. don't trust financial advisers/financial houses/lawyers.
2. don't trust banks
3. do your own research
4. don't put your house up as collateral for a margin loan.
5. if you don't know anything about investing don't invest.
6. don't trust anybody.
7. don't believe people based on emotion, gut feeling.
8. avoid cults
9. read all posts on aussiestockforums and then read again before investing.
10. those who have been ripped off are also likely to be further ripped off by some of those offering to help. (go to 1. and keep on repeating.)

gg

Garpal Gumnut said:

It may be worth summarising some lessons from this debacle.

1. don't trust financial advisers/financial houses/lawyers.
2. don't trust banks
3. do your own research
4. don't put your house up as collateral for a margin loan.
5. if you don't know anything about investing don't invest.
6. don't trust anybody.
7. don't believe people based on emotion, gut feeling.
8. avoid cults
9. read all posts on aussiestockforums and then read again before investing.
10. those who have been ripped off are also likely to be further ripped off by some of those offering to help. (go to 1. and keep on repeating.)

gg

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A wise recipe GG!

I was having a read of Alan Kohlers book "The Eureka Way" - had no idea that it was a book about the evils of FP's - but it is. I think those that have read it would recognise the pitfalls seen with SF.

Also, my two cents, I am an ex-Townsville resident, and have followed EC and Storm/OzDaq etc.. and as greasy as I always thought he was, we cannot blame investors for not seeing the troubles, nor for not trying to get out, nor for being "greedy" - all I can say is that I feel that EC and his organisation, his practices and methods are utterly deceitful and despicable and anyone who disagrees can discuss it with those he has wronged, in the carpark behind the Vale Hotel at closing time.

A worst - a liar, a cheat, a fraud, a malicious sociopath, with only his own over-infalted ego and net worth to worry about. At best, a complete and utter brain-dead moron. Note that I post with my real name, with nothing to hide. </end rant>