Storm Financial Group

[carey ramm]

Well it is hotting up in here.

I would just like to comment that, like it or not, this forum has evolved into a semi support structure for storm investors and many do read it - I know that generally these forums are about investments but the reality is Storm is now dead and thankfully as an investment mechanism it is no longer available to the public. So to many the forum is useful to vent on and to keep up to date with developments (Solly u do a fantastic job). Please bear in mind that many Storm clients who do read this forum are under enormous stress, they feel despair and failure, and many are seeking medical treatment and counselling. They have families just like we do.

I too would like to welcome Cerebrus - Cerebrus it would be very useful to many of the posters on this forum if u could shed some light on the storm/banking relationship and how this worked. In particular how the banks approved all these home/investment loans where the borrower did not have the personal exertion income nor proven investment income or even asset backing to be able to service the interest payments let alone the capital repayment. If many of these people wanted to borrow to buy another investment such as say an investment house then many of them would never have gotten the funds or if a few did it would have been for a susbtantially lower amount. I for one have never seen loans like this before - ever. So please tell us how?

Many of u who comment here say u have friends who have been destroyed by Storm - well ask these friends if u can look at these loan documents and see for yourself.

Where were the audit functions of the banks - with the volume of business Storm were writing surely some of these files must have been audited? Remember that without the home/invetsment loan there would have been no margin loan so this is very much the core of the problem.

Pilots u should remember that the vast majority of Storm clients have been totally wiped out in terms of net wealth. From the clients I have seen there is about 1 in 6 that have any slim chance of beginning the long journey of rebuilding their personal finances. Most of the others face personal bankruptcy and at an age where many are retired so they cant go out and get another job. So these people have nothing to lose and have only upside by pursuing justice. We have credit laws in this Country to protect people from bad behaviour. If there wasnt at least a smell of bad behaviour do u think ASIC would be investigating on such a large scale and there is a major Parliamentary Enquiry. Just take a look at what the media have uncovered and they are on the outside looking in.

The Storm campaign has already seen some positive outcomes for some victims such as:
- reduced negative equity payouts on margin loans
- waiving of loan break fees
- life tenancy agreements for the family home
- some home loans have been set aside completely and hopefully many more may follow (i should point out that the goal for most Storm investors is to save the family home - they realise their investments are all gone)

All of these are a better outcome than the do-nothing scenario. So Storm investors would be doing themselves a dis-service if they didnt at least look at these paths forward as opposed to copping it on the chin as all their own doing.

I should point out that not all lenders are doing this - hence the impending legal action from Slater and Gordon.

 

[SJG1974]

Hi SJG1974,

A small addition to my original disclosure for clarity.

I should say I am/was close to all above mentioned parties over the past many years, but due to events in recent months I have not been in regular communication with any of the above parties for one reason or another depending on the party. Therefore, I am not a conduit to getting answers on current questions.

So to answer your second question in relation to the Cassimatis website, I do not know if or when the website will be reopened. If I had to guess, I would think that it would not be reopened anytime soon.

In relation to your very first query, my primary intent was firstly to simply warn those innocent readers and contributors of the potential dangers when accepting advice or opinions provided here as neutral and “helpful”. As we know, the internet, due to its seeming anonymity, is a haven for this sort of behaviour but it seemed exceptional when reading this thread.

As to your first query SJG1974, well my second priority was to do just as you suggest over the next few weeks. Stay tuned, I think you will be interested.

Cereberus,

I certainly will be interested. I just hope it doesn't continue on from the rubbish that Manny and Julie tried to peddle on their now non-operational web site...."its all the banks' fault, its a black swan event that noone saw coming, trust us because we are trustworthy, our 7% fees were low by industry standards etc. etc." That website ended up being quite comical (if you weren't a poor old Storm client that is).

It would be good to see some people associated with the workings of Storm actually take some responsibility, rather than shifting the blame all the time.

Again, your insights into this mess will be eagerly anticipated, by me at least.

 

[SJG1974]

Have a look at this article from the Townsville Bulletin;

http://www.townsvillebulletin.com.au/article/2009/04/22/49841_newsphoto.html

There's a link to pics that shows the fit out of the Townsville HQ.

Looks like a hotel moreso than a financial planning office.

Whats the old saying "you can't turn **** into strawberry jam". Looks like Manny and Julie certainly tried to though...

 

[kincella]

quote from Marcus Padley today....
its aimed at investors generally...no matter what the investment..its a good read

Your stupidity is directly proportional to how unrealistically rich you want to be. Only the financially ambitious (to use a polite expression) sent money to the Philippines.

http://business.theage.com.au/busin...-guide-to-the-money-jungle-20090424-ai62.html

 

[pilots]

Well it is hotting up in here.

I would just like to comment that, like it or not, this forum has evolved into a semi support structure for storm investors and many do read it - I know that generally these forums are about investments but the reality is Storm is now dead and thankfully as an investment mechanism it is no longer available to the public. So to many the forum is useful to vent on and to keep up to date with developments (Solly u do a fantastic job). Please bear in mind that many Storm clients who do read this forum are under enormous stress, they feel despair and failure, and many are seeking medical treatment and counselling. They have families just like we do.

I too would like to welcome Cerebrus - Cerebrus it would be very useful to many of the posters on this forum if u could shed some light on the storm/banking relationship and how this worked. In particular how the banks approved all these home/investment loans where the borrower did not have the personal exertion income nor proven investment income or even asset backing to be able to service the interest payments let alone the capital repayment. If many of these people wanted to borrow to buy another investment such as say an investment house then many of them would never have gotten the funds or if a few did it would have been for a susbtantially lower amount. I for one have never seen loans like this before - ever. So please tell us how?

Many of u who comment here say u have friends who have been destroyed by Storm - well ask these friends if u can look at these loan documents and see for yourself.

Where were the audit functions of the banks - with the volume of business Storm were writing surely some of these files must have been audited? Remember that without the home/invetsment loan there would have been no margin loan so this is very much the core of the problem.

Pilots u should remember that the vast majority of Storm clients have been totally wiped out in terms of net wealth. From the clients I have seen there is about 1 in 6 that have any slim chance of beginning the long journey of rebuilding their personal finances. Most of the others face personal bankruptcy and at an age where many are retired so they cant go out and get another job. So these people have nothing to lose and have only upside by pursuing justice. We have credit laws in this Country to protect people from bad behaviour. If there wasnt at least a smell of bad behaviour do u think ASIC would be investigating on such a large scale and there is a major Parliamentary Enquiry. Just take a look at what the media have uncovered and they are on the outside looking in.

The Storm campaign has already seen some positive outcomes for some victims such as:
- reduced negative equity payouts on margin loans
- waiving of loan break fees
- life tenancy agreements for the family home
- some home loans have been set aside completely and hopefully many more may follow (i should point out that the goal for most Storm investors is to save the family home - they realise their investments are all gone)

All of these are a better outcome than the do-nothing scenario. So Storm investors would be doing themselves a dis-service if they didnt at least look at these paths forward as opposed to copping it on the chin as all their own doing.

I should point out that not all lenders are doing this - hence the impending legal action from Slater and Gordon.

Carey, I am sorry that people will go down bad on this, but you are forgetting that NO ONE held a gun to the head and said buy Storm.
Second I had people call me in Perth to tell me how good it was, one couple took ALL of the super they had in dumped it in Storm, we told them NEVER have all your eggs in the same basket. Most of the people that have lost every thing, you will find they had every thing in Storm, THAT IS A TRAIN WRECK WAITING TO HAPPEN. The worst thing about this whole sorry lot is that some of the sales people walked away with up to $250,000 commission on a single sale.

 

[Solly]

its easy for you and mr gg to say that aferall youse are worth millions. my friends and family have been done over by these people and are facing a very scary and bleak future. i dont know what will be happeng with the leagal action but i dont think there will be much left after legal fees etc. i read the links above even me can work out that $20 mill isnt much insurance when you split it among all the victims. thats if the insrance will pay anything. you and mr gg sound like those smug rich people that sit back and shovel out advice that so is easy but i repeat you dont know what we are going thru. all the victims need the banks to right off the loans. that would be a start. remember all the victims have families and they all know which banks and people havew scammed them and they wont be afraid to tell others which banks and people scammed them. word of mouth travels far in the bush people will only take thier money to those who they trust and havent scammed friends or family and who the hell is ed pankaw ?

Chris,
Yes things are easy for me, because I choose it to be. Believe it or not it's exactly the same for you. No matter how upset you and your family & friends get, it changes nothing. Getting upset and ranting just tires you out and delays your way forward. What you need is action, get moving, don't brood, don't stare at the blank wall. Screaming and jumping up and down just leaves you in the same place with a hoarse voice and sore feet.
Seek a remedy, seek advice, seek assistance, if you can't do it yourself you need help from others to get you on your way.

Everybody on this forum has made mistakes, stuff ups, there's probably some here who have lost everything a couple of times but they are still here.
You need a plan, plan you action then action your plan, if things aren't working then chart another course. I understand that you have lost out but it doesn't mean that things stay that way but you must get moving NOW.
If you lose your house, get another one. If you lose your job get another one.
If you are too old to work, sick or disabled as a last resort the government will help.
If you can work, are healthy and able you have the future at your feet. Don't waste any more precious time....
I'm a firm believer in living life in the present, the only thing that really exists is this moment, don't waste it.

 

[Steve Borden]

It is of course well-stated that the reason people went to Storm was to secure a sound retirement, unfortunately they were the victims of a very slick sales process that positioned the model as a low risk investment strategy compared with the risk of doing nothing.

It was predicated on blue sky modelling with no exit mechanisms except cross your fingers and hope for the best, if that doesn't work just tell the client your house is safe and we have insurance that will cover it. The client was not to know this at the time and as Storm were FPA members and regulated by ASIC, you would have thought they knew what they were doing and if they didn't then they would have been stopped.

Furthermore not only did Storm strongly endorse the model the Bank (CBA, BoQ, etc) gave them a loan based on the Storm model, from a client's perspective surely the Bank must have completed a diligent credit assessment and would not have lent them the money if they didn't think they could repay. No matter how the Banks (and their many supporters) spin it, the approval of a loan based on investment projections provided by Storm was a quasi endorsement of the Storm model.

What the client didn't know of course was that for many, the loans were based on made up income figures, inflated property valuations and total misrepresentations of their assets and liabilities positions (by usually omitting margin loans).

So the client goes to a licenced investment adviser who makes a recommendation and in support of that recommendation a major financial institution lends them the money to invest.

Would a second opinion have been prudent, the answer is of course yes. Do they have the luxury of that now, of course not.

Would I have invested with Storm, unreservedly no but my history, training and occupation made the flaws easy to spot. Most of the investors didn't have that knowledge or inside understanding.

So we are now where we are and the former clients of Storm are trying to save what they can, be it their house, their super or their retirement. When faced with the same situation does anyone here seriously expect them to lie down and just accept it? Would you?

We all would exhaust every possible legal avenue available, sure some would do it differently but ultimately the goal is the same. The goal being to ensure all is not lost.

It may be that the Banks come to the party or Slater & Gordon achieve an outcome that saves someone's house or someone's retirement, isn't that a good thing? Afterall, if the Bank has misrepresented a clients financial position simply to get the loan approved (and they have on many occassions) then why shouldn't they be forced to compensate, if the clients were badly advised by Storm then why shouldn't the insurers pay.

Sure the clients have to wear some blame and no one expects a magic wand to be waived with their financial position re-set to what it was in 10/07 but only the most unfeeling would begrudge them saving their house or their retirement.

 

[Garpal Gumnut]

It is probably useful to have a summary, now that we have everyone at the table, including some of Manny's minions in the last few days.

On reading all the posts again this is my summary.


1. Much money and many people's life savings have been lost in the Storm debacle.

2. Many unsophisticated investors were conned in to sophisticated financial instruments and gearing by smooth talking financial advisers employed by the Cassimatis' and Storm Financial Group.

3. The FPA Financial Planning Association and Australian Security and Investment Corporation ASIC knew of the problems but were tardy in their reaction.

4. Some bank officers must have known that the targets were unsophisticated and by collusion or turning a blind eye assisted the investors into these instruments, thus leaving their institutions, BOQ, CBA, Macquarie, open to litigation.



These are the known knowns.

Anybody like to add to this.

gg

 

[Trevor_S]

2. Many unsophisticated investors were conned in to sophisticated financial instruments
[/B]
...
These are the known knowns.

Anybody like to add to this.

I would argue the above point is incorrect. The investment structure was extremely simple, heavily gear into an index fund and hope on a wing and a prayer for continual CG, the same thing a whole swag of FP's push as well as many REA's and the guys at Sommersoft for example, load up out the "ying yang" with debt. You can't get much simpler, in fact it's so simple as I have reiterated time and time again. You don't need an FP to use that system, there are any number of listed index funds, dollar cost average into them and save a whole crap load of fees !

There was no real "conning" to my mind, there was gullibility and an unrealistic expectation. I am still in two minds if EC is just a slick salesman or is genuinely deluded. I have no doubt all groups were culpable, ie the FP's the banks AND the Investors... the big difference is the last group are the ones that lost the money, they are the ones ultimately responsible.

See the link from Kincealla and the quote from Marcus Padley below, many of the same points I have regurgitated in the past.

http://business.smh.com.au/business...-guide-to-the-money-jungle-20090424-ai62.html

• Here are a few truths and tips about buying financial product:
  
  [*]Don't expect the law to protect you; no one can protect you from your own stupidity in your own living room.
  
  [*]Take responsibility yourself. Have your wits about you. Common sense will suffice. You are your only defence.
  
• Most dodgy products are flashing warning signals. If the salesman has travelled 100 kilometres to see you at 10.30 at night, something's wrong.
  
• Remember the golden rule: If it's any good, you wouldn't be offered it. If you get offered it, you don't want it.
  
• If you don't understand it, don't buy it. Complexity is camouflage.
  
• Don't put much in any one product.
  
• Be very careful borrowing to invest. There aren't many (any) asset classes that will reliably return you more than the cost of borrowing. There aren't any that will return it without risk.
  
• If you are buying a dressed product, you are almost certainly paying more than market interest rates.
  
• Reward is always balanced by risk. You will be told about the rewards. If you can't see the risks, you clearly don't understand.
  
• Don't be rushed. There are a million financial products out there. You don't "need" to buy this particular one.
  
• Anyone selling you a return of greater than 9.5 per cent per annum either has his fingers crossed behind his back, is lying or hoping or is selling you a greater-than-average risk.
  
• Anyone earning a commission of more than 2 per cent is selling something hard to sell; you probably shouldn't buy.
  
• Your stupidity is directly proportional to how unrealistically rich you want to be. Only the financially ambitious (to use a polite expression) sent money to the Philippines.

 

[Solly]

There was no real "conning" to my mind, there was gullibility and an unrealistic expectation. I am still in two minds if EC is just a slick salesman or is genuinely deluded. I have no doubt all groups were culpable, ie the FP's the banks AND the Investors... the big difference is the last group are the ones that lost the money, they are the ones ultimately responsible.

Trevor, when things were going pear shaped with Storm and obviously not retrievable, a direct quote to me was "Don't worry Emmanuel with sort it all out". It was an almost "religious" belief that all will be ok.
Maybe a delusional and unrealistic stance, but still a very powerful force when basic beliefs are being challenged.

 

[darkside]

Some friends of mine had been caught up in the whole "hype and excitement" of the Storm operation to the extent of going to the lavish parties and "hanging " with the "in crowd" and as Solly suggests they were like they had found a new religion and EC was the most revered, on numerous occasions they had told me how i was missing the boat by not jumping on board with them and almost like "amway sales people" financial wealth was just around the corner with no input from them except the occasional party and sign a few "docs. They too had the same "mantra" going as the ship started to list and i suggested they should bail, "wer'e not worried, Manny knows what he's doing ".Now they have a massive mortgage on a once owned property, and if they both work till they are 135 years old they should be back on their feet.But at the end of the day, no one held a gun to their head and made them do it .

 

[-Bevo-]

Some friends of mine had been caught up in the whole "hype and excitement" of the Storm operation to the extent of going to the lavish parties and "hanging " with the "in crowd" and as Solly suggests they were like they had found a new religion and EC was the most revered, on numerous occasions they had told me how i was missing the boat by not jumping on board with them and almost like "amway sales people" financial wealth was just around the corner with no input from them except the occasional party and sign a few "docs. They too had the same "mantra" going as the ship started to list and i suggested they should bail, "wer'e not worried, Manny knows what he's doing ".Now they have a massive mortgage on a once owned property, and if they both work till they are 135 years old they should be back on their feet.But at the end of the day, no one held a gun to their head and made them do it .

Missed the Boat

 

[Julia]

There was no real "conning" to my mind, there was gullibility and an unrealistic expectation.

There are companies out there at present, mostly property trusts, which are offering dividends of up to 600%. Is anyone going to look at this and think "whacko, what a great return" and buy it? You bet someone will.
So yes, I agree much of the Storm thing was about unrealistic expectations which didn't stand up to simple logic in many instances.

That said, until we know the extent of fabrication of figures by anyone other than investors themselves maybe we need to withhold judgement.

 

[darkside]

Bevo, so funny , but alas so true, and my friends were up the front of that boat , with about 2million reasons to cry about it going over that waterfall.

 

[bunyip]

Trevor, when things were going pear shaped with Storm and obviously not retrievable, a direct quote to me was "Don't worry Emmanuel with sort it all out". It was an almost "religious" belief that all will be ok.
Maybe a delusional and unrealistic stance, but still a very powerful force when basic beliefs are being challenged.

Judging from some of the questions that appeared on the Cassamatis website, there were still some who thought Manny would sort it out even after the whole show had fallen off the cliff!

 

[Solly]

"Broken record"

"It is almost six months since the discovery of Storm Financial's troubles and the blame game continues to be played."

More from Kate Kachor in Investor Daily

http://www.investordaily.com.au/6326.htm

 

[Solly]

............

Welcome Cereberus .............I'm also eager to get a truthful unbiased view of the events. My initial contact with the whole storm saga was a couple who have lost everything and are now trying to buy their house back from the bank.

I believe I endeavour to keep an unbiased open mind about the whole event. Next time you speak with the principals can you ask why their research area and software couldn't pick up the downward market movement and execute appropriate actions in a timely manner to protect the clients and save them from harm.............

Maybe Cereberus you can add clarity to this as well, which I believe was from the Storm website. How is it possible with all the "behind the scenes" analysis and monitoring, why weren't actions put in place to pick up the market changes and implement suitable actions to preserve capital, investments and savings of the clients. ?

 

[Smiley]

The answer is simple - EC believed that the banks, specifically CB would carry the investors - even those with hundreds of thousands of dollars of negative equity. He knew who they were and where the clients in margin call were and just assumed that the banks would not shut them down. In the last few months he was shocked that the same bank shut down his line of credit and credit cards so the ego must be in the way of common sense.

 

[Solly]

"Liquidators sell Storm Financial’s Margate land"

"THE block of land that was to be home to the Storm Financial office is for sale, after liquidators were appointed to wind up the failed company.
The 3249sqm block of land on Oxley Ave, Margate, is for sale with real estate agency Knight Frank.
Offers for the parcel of land will be accepted until April 29."

"Mr Jelich said the actions of the Storm owners were ``reckless’’ and ``irresponsible’’ and said he was working to come up with a solution to finding compensation for those stung."

Full story here;

http://redcliffe-and-bayside-herald.whereilive.com.au/news/story/liquidators-sell-storm-financials-margate-land/

 

[Solly]

"Slater & Gordon pursue ANZ Bank"

"LITIGATION giant Slater & Gordon is suing the ANZ Bank for allegedly recommending clients to invest in a Basis Capital hedge fund that collapsed, owing investors $320 million"

"The litigator is suing ANZ for negligence, misleading and deceptive conduct, and breach of contract, claiming the Basis investment was not appropriate for the "personal circumstances, risk profile and investment objectives"

Although not related to Storm, it might give the Stormies who read this thread an example of what S&G are doing in other cases....

Here's the story by Anthony Klan in The Australian;

http://www.theaustralian.news.com.au/story/0,25197,25401548-643,00.html