Storm Financial Group

[Julia]

I think it was 300 for house and then 1.5 margin loan or around abouts. They said he used his super? How is that so when he did not look of retirement age. Oh his wage was around $50, 000 a year. Australian version of subprime!

I also wondered about using his super. And how could he - or anyone - say they didn't think this was risky which is what he seemed to be suggesting.

 

[Julia]

2. You've defended your actions of putting new clients into a plunging market, by stating "You buy stocks when they're cheap".
Given your decades of involvement in the financial markets, can you explain your lack of understanding of the suicidal risks of buying plunging stocks....how could someone of your experience fail to realise that 'cheap' is likely to become much cheaper when the market is sinking rapidly?

Storm weren't the only people doing this. Gerry Harvey, interviewed as part of last night's 4 Corners programme, said he has lost about 1.5 billion (that's billion with a B) by buying stocks in his own company and others as they fell.

Don't suppose too many people will take too much notice of his predictions that this GFC will all be over soon, maybe in a month or two!

 

[Solly]

I've again looked at the media release on 30/1/09 by Wilkinson Media,

http://www.cassimatis.com.au/Storm_300108.pdf

And I find it "interesting" that their inclusion of Justice Greenwood's injunction hearing on 24th December 2008 quotes....

“I am satisfied that solely for interlocutory purposes, Storm has demonstrated a
sufficient likelihood of success in terms of Australian Broadcasting Corporation v O’Neill
demonstrating that the statement as to sole management of the margin loan accounts and
instructions allegedly given in the meeting on 4 December 2008 are capable of being misleading
or deceptive or likely to mislead or deceive”.

But omits the next sentence in Paragraph 43 of the Reasons for Judgment in this matter by Justice Greenwood, which is,

"Of course, the ultimate position must be tested at trial where the evidence will be closely examined and findings reached on all aspects of the controversy".

 

[Steve Borden]

With regard to the superannuation that was 'lost', perhaps it was rolled over (as were others) into the CFS FC PersSuper - CFS Geared Share (APIR Code FSF0311AU). The fund has an internal gearing benchmark of 55% and had a negative return to 31/12/08 of approx 60%.

 

[donteventryit]

With regard to the superannuation that was 'lost', perhaps it was rolled over (as were others) into the CFS FC PersSuper - CFS Geared Share (APIR Code FSF0311AU). The fund has an internal gearing benchmark of 55% and had a negative return to 31/12/08 of approx 60%.

Actually, Storm have previously recommended to clients that met preservation rules for supernannuation, to withdraw their superannuation and gear it up in their own name.

I have heard that a client was not even disclosed important information regarding the withdrawal of superannuation ie lump sum tax, the benefits of superannuation environment in comparison to personally held investments ...

It was nothing as tricky as investing superannuation funds into a geared managed fund ... It was simply withdrawn and geared in their own names.

 

[Steve Borden]

Agreed, but for those say below the age of 55 who had to remain in the superannuation environment some were rolled into the Geared Share Fund. This effectively achieved the same gearing strategy for assets inside and outside of super.

 

[Solly]

With regard to the superannuation that was 'lost', perhaps it was rolled over (as were others) into the CFS FC PersSuper - CFS Geared Share (APIR Code FSF0311AU). The fund has an internal gearing benchmark of 55% and had a negative return to 31/12/08 of approx 60%.

Steve one ex client talked about an MLC branded geared super investment. I can't recall the exact details but I'm sure that they expressed some alarm about the fees to change over. If I see them again when I'm back in BNE I'll ask for more info.

 

[bunyip]

Storm weren't the only people doing this. Gerry Harvey, interviewed as part of last night's 4 Corners programme, said he has lost about 1.5 billion (that's billion with a B) by buying stocks in his own company and others as they fell.

Don't suppose too many people will take too much notice of his predictions that this GFC will all be over soon, maybe in a month or two!

I guess it's a bit more understandable in Gerry Harvey's case, although still almost unbelievably foolish. Gerry has plenty of dough and probably thought he'd take a bit of a punt. But at least he wasn't punting with other peoples money, as Storm was. Storm were professional investment advisers, financial planners, manages of other peoples investments, and supposedly experienced market players.....they should have known better.

I wonder why Gerry would go on a nationwide TV program and make that sort of admission.

He'd be trying to sound upbeat with his prediction of a quick end to the financial crisis, obviously attempting to instil consumer confidence so as to speed up the recovery process.
I doubt if many people will swallow it.

 

[awg]

Hi, This is my first post as I've only just joined this forum.


Around October 17 Storm had these clients to sign a new document to switch 100% funds to cash. Unfortunately Storm didn't pass these requests on to the Margin Lender. Some clients who asked were told that it was in the hands of their margin lender.


I find it hard to come to terms with the lies I've believed, the bad advice that I have taken, and my family who I have let down.

I may rant a little more.. but as pointed out.. doesn't achieve results.
Thanks.

If what you say is provable, I believe you would have a watertight legal case against, whoever it was that failed to follow your instructions.

I would certainly find out as much as possible about the circumstances surrounding that non action, including writing to the liquidators, asic, cassimitis website.

It seems to me you would have a stronger case than others and may be able to sue, personally.

As i have written before, I ALWAYS conduct my financial affairs be return receipt email, FOR THIS EXACT REASON, I wont bore you with the details, but it just amazes me how many ****-ups have taken place ( at least half a dozen, which the organisation I dealt with have had to rectify, cause of my emails...at first they tried to wriggle out.

Another thing is I try to only deal with the biggest, most secure companies...they still stuff things up, but they have less chance of going broke, and usually are prepared to settle on the quiet, especially after I threaten to complain to ASIC or APRA.

Good Luck

 

[boomai]

Please tell me why, particularly when I repeatedly asked and asked to be sold up, why they wouldn't sell us up -
I am one of many who want to know - or should I say need to know the answer to this question.

I'm sorry shibby, I can not tell you why. I don't know why. This was obviously a high level management decision. Had I been privvy to this information, I'd have known to insist on the switch to cash instead of believing blindly as other clients.

Boomai

Storm seem to have been making up their risk management strategy as they went along.
I'm happy to be corrected if I'm wrong on that point. But to me it almost beggars belief that a professional financial planning firm would wait until the market fell more than 36%, before they decided it was time to move into cash.
Even then, it appears that they didn't follow through on that decision.
Is there something I'm missing here, or did they indeed make up their risk management as they went along?
If they didn't, then can you tell us exactly what their risk management parameters were?

I may have misled you.. I'm not a financial advisor and have no direct knowlege of Storm's risk management.. I only saw what I saw.

boomai...Have you considered calling ASIC on 1300 300 630 ??
I believe that you should seek advice, you may be covered under the Corporations Act for alerting of this behaviour...

I have talked to ASIC, however I didn't mention the above behaviour to them.
I believe that those details, however are already known to ASIC though.

I think EC sees "normal circumstances" = bull market.
He didn't believe that the market could fall this far again.

boomai, there was a reference in an earlier post to an article in the Herald Sun on 21 Jan by Anthony Marx that reported;

Mr Paul said he was shown the oxygen tanks used during the seminars and that Mr Cassimatis personally told him about the use of room bugs to listen in on clients."

This is statement is untrue. There were no bugs, there was no oxygen.
Though I can't deny that there was some rarefied atmosphere at times.

If what you say is provable, I believe you would have a watertight legal case against, whoever it was that failed to follow your instructions.

I would certainly find out as much as possible about the circumstances surrounding that non action, including writing to the liquidators, asic, cassimitis website.

It seems to me you would have a stronger case than others and may be able to sue, personally.

Unfortunately.. (on closer reading) the document gives Storm the right to sell down to 100% at Storm's discretion. I had mis-read the document and believed what I wanted to read. Others assumed the same as me.

I have my suspicions as to why Storm didn't act on the switch documents. I can't prove them though, and it may not be helpful to other clients if I could prove them.

The four corners program last night was interesting .. I feel sorry for the other poor storm losers out there.. but I feel more sorry for the poor blighters who have lost friends and family in the terrible bushfires in Victoria.

 

[awg]

Unfortunately.. (on closer reading) the document gives Storm the right to sell down to 100% at Storm's discretion. I had mis-read the document and believed what I wanted to read. Others assumed the same as me.

I have my suspicions as to why Storm didn't act on the switch documents. I can't prove them though, and it may not be helpful to other clients if I could prove them.

.[/QUOTE]

above is a qoute from a post, sorry quote tags didnt work

#############################################################


A purported copy of this doc was posted on this thread.

If Storm withheld the ability to cash out on instruction, this is the worst thing I have heard so far.

I just cannot believe that Storm principles havent breached various Corporate regulations.

It is regrettable that the Company will be insolvent, and I strongly suspect the principles will also be broke, so that no money will be recoverable.

If they were smart, they will have set up relatives much earlier to now support them, but they dont sound smart enough

 

[bunyip]

Boomai

I assumed - apparently incorrectly - that you were a financial advisor with Storm.
What was your position with them?

 

[swazee]

A friend I know received this from the Financial Planners Association today:

"Whilst the FPA’s investigations continue, and I continue to be limited in what I can say about Storm specifically until those investigations are complete, what was abundantly clear from both our members and clients’ perspectives was this:

1. Many clients were not familiar with margin lending, and did not realise the extent to which they are in debt. Some were not even aware they had received a margin call.
2. The highly leveraged strategy that was applied pushed the limits of clients' available resources, and beyond. Many clients had everything tied up in a geared strategy, with no appropriate exit strategy.
3. The age bracket of many clients is pre or post retirement. Having all their super, savings and assets tied up in the one strategy, with Loan to Value Ratios (LVRs) at 85% at age 65+, combined with a 45% drop in the value of shares, has indeed provided the perfect storm.
4. There appears to have been little attention given to client income and the capacity to repay debt, in some cases.
5. The fee structure was well above rates typically charged in the industry, up front and ongoing, supported by our recent research.
6. Clients signed each and every page of a 107 page SOA and yet were not aware of what they were signing up to. They feel embarrassed and guilty for this. They are not sheeting home the responsibility entirely to Storm, but they do feel misled by ‘trusted advisers’.
7. The high levels of trust placed in Storm, and the faith that was placed in financial planners from Storm, has not delivered good outcomes for Storm, their clients, or our profession.

Some of the issues the FPA will be looking at include:

1. Our annual compliance process to see where we can add questions that might provide warning signs at a much earlier stage of potential issues that might be looming of this nature;
2. A second layer of market intelligence beyond our SAQ process, from members, that allows us to receive information that we can act on in a safe and reasonable manner;
3. The role of gearing and margin lending, and assessing client tolerance for risk, to ensure our members work to avoid or prevent the use of aggressive strategies from emerging again where inappropriate; and also as part of the Government’s legislative work in this area;
4. The education of consumers around financial literacy, and their relationships with financial planners, which might include actions that can be taken when clients do not understand, or wish to discontinue recommended strategies.
We welcome your input as always, and encourage you to go to the blog to start the debate about where to from here.

 

[Trevor_S]

For those who missed the Four Corners Show on STORM

it's available on ABC TV's ivew, my ISP has iview unmetered, so I use it a bit.

http://www.abc.net.au/iview/#/view/337805

 

[MR.]

Gerry Harvey, interviewed as part of last night's 4 Corners programme, said he has lost about 1.5 billion (that's billion with a B) by buying stocks in his own company and others as they fell.

Don't suppose too many people will take too much notice of his predictions that this GFC will all be over soon, maybe in a month or two!

He'd be trying to sound upbeat with his prediction of a quick end to the financial crisis, obviously attempting to instil consumer confidence so as to speed up the recovery process.
I doubt if many people will swallow it.

I thought Gerry lost 1.5 million. I thought big deal for someone like Gerry.
I reviewed and you are right, he said he lost 1.5 BBBBBBBillion....

He did say in the interview and I quote:
"We are on the verge of the greatest boom mankind has ever seen"

 

[Glen48]

G H shows how much talent you need to make money in boom times.
Selling goods at 28% interest is a not to hard, i reckon he will be one of the first to go under.
As I said he got the nothing to pay and hock you house to get deeper into debt scam up and running.

 

[Pindibog]

I thought Gerry lost 1.5 million. I thought big deal for someone like Gerry.
I reviewed and you are right, he said he lost 1.5 BBBBBBBillion....

He did say in the interview and I quote:
"We are on the verge of the greatest boom mankind has ever seen"

He came across terrible and I wondered if he was for real!! He must have a good support team around him. See how he laughed about loosing 1.5b. I am embarrassed about storm and he is telling the whole nation about his 1.5b mistake. Oh well I still have a billion he says???? I wish...

 

[MR.]

G H shows how much talent you need to make money in boom times.
Selling goods at 28% interest is a not to hard, i reckon he will be one of the first to go under.
As I said he got the nothing to pay and hock you house to get deeper into debt scam up and running.

That's the only way we are going to get back to the "Boom Times"
Loads more debt, just what we need!.......

----------------

1.5 billion sounds like a lot of money!!!!!!!!
Gerry Harvey's wouldn't be full of **** would he?

GH claims in the interview, since the "down turn" he has spent 1.5 billion on buying Harvey Normal shares and others!

GH is the Chairman and Director of the company.
He needs to lodge a "Change of Directors interest notice" if he has bought more HVN shares! But he has not lodged any notice recently.
http://www.asx.com.au/asx/research/...lts.jsp?searchBy=asxCode&allinfo=&asxCode=hvn

The last notice GH lodged according to the ASX was on the 3/3/08 and 13/3/08. The last transaction took GH share holding up by 2 million shares to 171 million shares (round figures)
http://www.asx.com.au/asxpdf/20080313/pdf/3180lsrjxcxrxg.pdf

171 million shares, according to the ASX, GH owns. At todays $2- per share price takes GH holding to = $342 million. At the hight of the market Harvey norman was worth $7- per share so that makes $1.2 billion. (Well that's got a "B" in it.)

It appears that GH has stretched the truth a little. He has purchased shares on the way down but that was nearly a year ago!
He bought a total of 2,440,000 shares released in two statements in March 2008 totalling just $9.78 million with an "M" not a "B".

Does it sound lodgical that GH just spent 1.5 billion dollars on shares?

Not from where I'm sitting! No wonder he can laugh.
He must have alot of faith in the opposition because he is not buying Harvey Norman!

and you trust these directors with your money?????
You'd gota wonda?
Where does it end..................

Happy to be corrected!
Looks like you're right there Glen48, sounds like they might "be going under"

 

[nomore4s]

lol MR.

Well he must be delusional if he thinks we are on the verge of the greatest boom mankind has ever seen, what did we just have then?

 

[Solly]

"Storm workers in limbo due to probe
Ex-Storm staff being turned away"

Story by Vishal Teckchandani from Investor Daily here;

http://www.investordaily.com.au/cps/rde/xchg/id/style/5746.htm

Some firms wont hire ex-staff until ASIC & FPA investigations are completed.


"Write-downs push Challenger to 10-year low"

Story by Colin Kruger in the SMH;

http://business.smh.com.au/business/writedowns-push-challenger-to-10year-low-20090210-83hl.html

The company had exposures to MFS, Allco Finance Group, ABC Learning, Babcock & Brown & Storm Financial.