Storm Financial directors lose appeal

Storm Financial directors lose appeal

A Federal Court has confirmed the directors of Townsville-based Storm Financial breached their duties in advice to clients that led to losses of more than $1 billion in 2008.

Emmanuel and Julie Cassimatis ran a financial advice model whereby clients took out home loans and margin loans that were then put into index fund investments. 

The pair had sought to have a 2016 decision overturned that had deemed them responsible for the day-to-day significant decisions of the firm, which concluded they had not shown enough care and diligence to prevent Storm from giving inappropriate advice. 

That appeal has today been rejected. 

Australian Securities and Investments Commission (ASIC) Commissioner John Price says he hopes this decision will mean "the aftermath of the Storm Financial collapse is now at an end".

"This important decision reaffirms ASIC's view of the importance of directors' duties and the obligations on financial services licensees," he says.

The firm's clients were "Stormified" and encouraged to take "step" investments over time. Once the company collapsed in early 2009, around 3,000 of its 14,000 clients had been "Stormified" with many sustaining heavy losses.

The funds were managed by Commonwealth Bank (ASX: CBA) subsidiary Colonial First State, Challenger and other non-Storm branded funds.

In the aftermath CBA provided $132 million to Storm investors, and in 2012 ASIC entered a settlement agreement with the bank to make a further $136 million available as compensation for losses suffered.

In May 2013, an $82.5 million settlement was reached with Storm investors who had launched a class action against Macquarie Bank in relation to Storm. Earlier that month, ASIC had secured $1.1 million in compensation on behalf of two former Storm investors, Barry and Deanna Doyle. 

In September 2014, ASIC entered into a settlement agreement with the Bank of Queensland Limited to pay approximately $17 million as compensation for losses suffered on investments made through Storm.

The Federal Court ultimately found against the Cassimatises in August 2016, and penalties were applied in 2018.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

A game changer? Aspiring to the new standard on workplace mental health
Partner Content
Work health and safety regulators have been more active in the area of mental health ri...
Aon
Advertisement

Related Stories

WA suspends planned quarantine-free travel bubble with Queensland

WA suspends planned quarantine-free travel bubble with Queensland

The proposed quarantine-free travel bubble between Queensland and W...

Start-ups ready for orbit aboard Space Machines Company’s first mission

Start-ups ready for orbit aboard Space Machines Company’s first mission

The start-up world is clamouring for its place in orbit with Austra...

South Australia’s first Netflix production adds momentum to booming film sector

South Australia’s first Netflix production adds momentum to booming film sector

South Australia has scored its first Netflix production, boosting t...

"Wake-up call" for the Gold Coast as rideshare driver tests positive to COVID-19

"Wake-up call" for the Gold Coast as rideshare driver tests positive to COVID-19

An unvaccinated Gold Coast-based rideshare driver in his 30s is rep...