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dmc333

dmc333

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Veteran 10k Posts Bay 13: Vintage Bay The Cult of Robbo
Mar 21, 2006
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WTF?

Hadn't really been across what was going until now. I've just spent a couple of hours reading articles and this thread-

http://www.aussiestockforums.com/forums/showthread.php?t=13176

And there's plenty of background articles if you google the name.

Seems some people have been double geared, using a home (owned outright) which was then overvalued for equity. The leverage was so high that their homes are now gone and they're owing money.

I'd never go near anything like this, but it seems there was a mix of greed and cluelessness. Sounds like plenty from the big end of Townsville are up the duff, but also a lot of unsophisticated investors who've somehow assumed they're at a financial planner (can you call them that?) and been stuck into something with endless reassurances and then totally ****ed over. Were risk profiles even used here?

I'm sure you're out there Karl, you want to weigh in on this one?

What's will be the punishment here? You'd imagine the Storm owners, taking 7% up front, will come out ok, financially at least. In the past I'd have said the investors were total morons, but reading some of the stories I've found some compassion.

For the owners of Storm? Dragged into the street and having their genitals ripped off might be a good start. ;)
 
Haven't read every article but am across the situation, similar story with me a couple of years ago, went to a financial adviser and his idea was similar, use the equity in my house to invest in the sharemarket, sounds good but...
The thing about this financial crisis is that some people who have been dumb and greedy are getting the mother of all hidings.
Surely the people who lost everything knew the risk, ffs i'm not that bright but the simple rules of 'if it sounds too good to be true it probably is' applies.
Same with people who thought house prices were going to the moon forever, lets all get rich, goodness gracious me you idiots.
A sucker is born every day and a fool and his money are soon parted.
 

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Yeah.

You gotta love the family that were worth 4 mil, eventually became worth 12 mill, and now have to sell their home and business because they are done and dusted.

Doesn't get more greedy and stupid than that.

The Brisconnect threads on ASF are worth reading and posting to here as well. Great site, ASF.
 
The most interesting one is towards the end of the ASF thread.

Someone's saying they sold their house... put it into Storm... make some money... the market turned and they decided to pull the pin, luckily 40k up... but because Storm was sandbagging them over removing their money, they lost an extra 13k in the resultant delay.

The reluctance to follow clients wishes when leaving seems to be a theme here.
 
As a financial planner and as someone who Storm tried to woo - i am very aware of the "storm" model and the characters of the people at the helm. In fact i have a story of the day and a half that me and two colleagues spent at the brisbane office that i'll never forget.

This was a trainwreck in slow motion - that was unavoidable.

Borrowing against your home to invest in sharemarkets is entirely appropriate if you are an aggressive investor with strong cashflow to support any debt.

If you are, as most of Storm's clients were, retirees or pre-retirees, reducing debt and diversifying exposure across asset classes is paramount.

I hope the founders find themselves behind bars.
 
The real injustice that they did to their clients was to recommend putting everything into ONE investment. The investment strategy that they employ is fine as long as you enter after the market has been arsed and only put part of your savings into it. I believe a big part of the problem for them was that Macquarie went back on their agreement and upped the margins required, which completely blew out their model and liquidated all their positions. I have heard their sales pitch before the crash, i'd love to see them try to pitch it now and still keep a straight face.
 
Pornstar said:
The real injustice that they did to their clients was to recommend putting everything into ONE investment. The investment strategy that they employ is fine as long as you enter after the market has been arsed and only put part of your savings into it. I believe a big part of the problem for them was that Macquarie went back on their agreement and upped the margins required, which completely blew out their model and liquidated all their positions. I have heard their sales pitch before the crash, i'd love to see them try to pitch it now and still keep a straight face.
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The fiduciary responsibility is between an adviser and their client.

The adviser owes the client their best efforts and keeping their interest first and foremost.

The banks although somewhat culpable are not the reason these clients are bankrupted. the blame lies with the adviser and Storm 100%. Make no mistake, Storm founders will try to apportion blame to all and sundry.

I asked Emmanuel direct 2 years ago what happens if the market fall 47%.

In his words "We're all f*&^ed"
 
I heard they advertised themselves as a player in their field who has been doing the rounds for 30 years. They have only been around for 14 years.

Not sure if it's true.
 
I went through the whole ASF thread, I'm shocked, reminds me what I went through a few years back I'd been visited by a Roy Morgan research lady and went through the whole research thing with diary and it went for a week I think, what tv I watched, what I ate, what I spent my money on, evrything I did basically I recorded and sent it in to them, then they asked me if I was interested in visiting a financial adviser for 50 bucks and I agreed, if I went through with what the F A planned ie spent about a grand, I would be re imbursed about 350 dollars, I only went to the first free interview and took the 50 bucks from Roy Morgan, but the adviser used the same idea, use the equity in my house to buy shares basically, I played dumb and dressed like a hobo. Needless to say i declined his offer, but I was recommended by a workmate who had done the same, this is in SA, there will be more 'Storms' to come i'd say.
 
FAILED investment group Storm Financial allegedly pumped oxygen on 300 or more clients to raise levels of enthusiasm during extended seminars.
The Queensland company, which collapsed this month, also purportedly used listening devices to monitor conversations in private rooms used for one-on-one consultations with prospective investors.

Perth-based financial planner Cameron Paul alleged yesterday that Storm executives, including founder Emmanuel Cassimatis, proudly revealed the bizarre inner workings of the company's Brisbane office about two years ago.

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

Mr Paul, a director of Momentum Planning, had been approached by Storm to form a joint venture partnership to give the then fast-growing Townsville-based company a foothold in Western Australia.

But Mr Paul said the two firms never merged because he found Storm's business practices and client ethics troubling, likening it to a cult.

"We were absolutely shocked," Mr Paul said.

Mr Cassimatis did not return calls yesterday.

Many of Storm's 14,000 clients face huge financial loses and even the loss of their homes after taking out high-risk margin loans to buy shares, which have now fallen in value.

A meeting of more than 200 Storm clients gathered last night at Margate, on the Redcliffe Peninsula, to consider joining a class action.

Storm appointed administrators this month after it collapsed owing $78 million.

The first meeting of creditors was also held yesterday.
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http://www.news.com.au/couriermail/story/0,23739,24939622-952,00.html

And they're still drinking the cool aid.

After hearing News Radio this morn my sympathy began to subside somewhat. I heard many of them are now blaming the old arch criminal 'the bank' for allowing the loans. Which is swallowing the Storm company line, the kind of company which does the following, when possibly insolvent.

The administrators confirmed that the company founders, Townsville's Emmanuel and Julie Cassimatis, received a "dividend payment" of $2 million on December 15. That was just days before the company initiated legal action against Commonwealth Bank, and weeks before Storm was placed in administration.
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http://business.theage.com.au/business/cash-sucked-out-of-storm-20090120-7lnf.html
 

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the 'cult' reference gets me, when I read the ASF thread, it was evident there, these people have been sucked in, similar things happen in these big provincial cities, there's always the 'richest' person in town that a lot of people gravitate toward, similar to keeping up with the Joneses, biggest house, hot wife, smooth talker, be wary...
 
The Falcon Strike said:
The fiduciary responsibility is between an adviser and their client.

The adviser owes the client their best efforts and keeping their interest first and foremost.

The banks although somewhat culpable are not the reason these clients are bankrupted. the blame lies with the adviser and Storm 100%. Make no mistake, Storm founders will try to apportion blame to all and sundry.

I asked Emmanuel direct 2 years ago what happens if the market fall 47%.

In his words "We're all f*&^ed"
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I read today that it's not only the clients that have been done over by Cassimatis, but also a lot of advisers as well. Practices that sold their client bases to him for say a couple of million, obviously got paid an amount or percentage up front, and then they were to get the rest in installments. Obviously those next installments won't be coming.
 
Papa G said:
I read today that it's not only the clients that have been done over by Cassimatis, but also a lot of advisers as well. Practices that sold their client bases to him for say a couple of million, obviously got paid an amount or percentage up front, and then they were to get the rest in installments. Obviously those next installments won't be coming.
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Wasn't there a finance business in Sydney which sold out to Lehman Bros and got paid in shares, 250 million dollars worth, look what happened there.
 
dmc333 said:
I'm sure you're out there Karl, you want to weigh in on this one?
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Already did in the thread on what's wrong with the property industry.

Storm are getting sued over this, and rightly so. They gave terrible advice and cost a lot of people a lot of money (I'm against gearing against the family home btw).

But this serves as an example as to why its important to have legislation regarding advice. These guys are going to cop it hard for what they did, but if they had of advised these investors to leverage against their house and invest in more property in US subprime areas, there would be no avenue of recourse for the investors to take.

At least there is protective legislation in financial planning. Hopefully S&G get some money back for these poo suckers. In property any dropkick agent or broker can give advice without actually being accountable for it.

Its people like Storm who get financial planners lumped in with car salesmen and real estate agents. They sell this dream lifestyle of insane wealth and constantly climbing markets without actually looking at what is really appropriate for people. A good planner has a focus on two things:

Making sure people are educated and invested in the products most appropriate for them from both a risk and return focus.

Making sure the structure of their investments is as efficient as possible from all points of view.

Reading that ASF thread was very sad to see retirees getting nailed by inappropriate products for no reason. the industry needs another shakeup (regardless of the fact I think its much safer than the RE industry) to move from commission based payments to an efficient fee for service model.
 
Papa G said:
I read today that it's not only the clients that have been done over by Cassimatis, but also a lot of advisers as well. Practices that sold their client bases to him for say a couple of million, obviously got paid an amount or percentage up front, and then they were to get the rest in installments. Obviously those next installments won't be coming.
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The planners were going in with their eyes wide open. Needless to say the reason I know so much about this mob is they wanted to effectively take us over and stormify our clients.

I'd have to leave every shred of moral credibility behind to do that. And those planners who have lost out - tough - should have showed some moral scruples upfront to your clients and you would still have a business and a job.

I personally hope they all go to gaol, these aren't financial planners - these are sharks who are very much in the minority but give my profession a bad name when we work so hard to build integrity.

I am very passionate about this - my opinion of the the Storm founders from having spent a day and a half with them is on the par of a wilful murderer. They knew they were destroying lives, they had pages and pages to justify their position, but they knew if the market fell 47% they were all f***ed. Emmanuel used those words specifically.
 
The Falcon Strike said:
The planners were going in with their eyes wide open. Needless to say the reason I know so much about this mob is they wanted to effectively take us over and stormify our clients.

I'd have to leave every shred of moral credibility behind to do that. And those planners who have lost out - tough - should have showed some moral scruples upfront to your clients and you would still have a business and a job.
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Yeah I pretty much agree. On one hand I guess I can slightly sympathise with these guys who have possibly built up a business for 30 years, were seduced with dollar signs and were simply thinking of their own retirement. On the other hand, if you'd built up a loyal client base over many years, selling these guys down the river just to look after your own retirement is pretty shoddy. Greed does funny things to people sometimes.
 
I'm willing to cop it if I've started a crap thread here :eek:

But I'm wondering where the 2 star rating comes from? Apparently the 'stormites' are out and about, monitoring the chat (going by ASF). And going by the tone of replies in here, I'm wondering if Storm have registered to vote this down.

Conspiracy!
 
This is where I believe the licensing and regulatory system falls down. ASIC isn't proactive in the area of clients being given the right advice and what they are paying for this advice. This mob was charging some ridiculous amount of fees and was geared to the ears. It's OK when the market is flying, you don't notice the fees as much and with the gearing you are well out in front but we all know markets are cyclical and it was basically a ticking time-bomb. There will always be rogues in every industry who will continue to do the wrong thing by the clients in the name of making a buck for themselves. Be it the financial sector, property, banking, legal, medical...
 
I went to a Storm financial seminar about four years ago in Townsville, it was two, two hour sessions which were a very basic introduction to stock market investment.

At the seminar the Storm representatives were polished and professional and had a myriad of statistics at there disposal with all the fancy pie graph etc.

It was all geared towards the share market, they spent the first session openly criticising the housing market and basically guaranteeing the housing market would crash and that now was the time to gear against your house before the bubble burst.

Session two was a little more detailed but basically the same. The major difference was this time the hard sell was on giving examples like the opportunity to put your kids through private school, holidays every year the opportunity to work part time all the usual sales pitch.

Cassimatis had been in the financial sector in various guises in Townsville for about 20 years originally selling insureance.
He was highly respected and gathered the reputation of local man makes it big, the local you can trust his and his firms face was regularly on the TV. His offices in Townsville were opulent to say the least and he built the largest and most expensive mansion in Townsville. He oozed money and his pitch was to try and help everyone else if you follow my plan you too can have the good life like me.

I am very conservative investment wise, and was not convinced the storm way was for me. The storm staff then repeatedly told me that this was a once in a life time opportunity and I was going to deprive myself and my family of a independant wealthy happy lifestyle and this was a big mistake.

Cassimatis is a parasite he openly leached of the less financially educated people in North Queensland to invest with him relying on the false media speculation about him being a leading investment advisor.

The Townsville paper has had a lot of stories about battlers having to sell there family homes because of there investments with Storm, tragic stuff. Good honest hard working people that were financially ignorant were his target (cane farmers, ex military veterans on pensions, cashed up fly in fly out miners)The man his wife and his firm are criminal and should be prosecuted. Storm financial have sullied the name of Townsville and honest financial advisors nation wide.

Another reason to hate him is he wouldnt sponsor our local footy side because he did not like aussie rules.
 
NQ Hawk said:
It was all geared towards the share market, they spent the first session openly criticising the housing market and basically guaranteeing the housing market would crash
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This should be a warning sign for anyone seeking advice or considering purchasing any major asset. If the person you're listening to is spruiking about how one particular asset is miles better than all the others (this happens when dealing with real estate agents and shonky planners a lot), they have an agenda and not your best interests at heart.

and that now was the time to gear against your house before the bubble burst.
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This is awful logic imo.

Session two was a little more detailed but basically the same. The major difference was this time the hard sell was on giving examples like the opportunity to put your kids through private school, holidays every year the opportunity to work part time all the usual sales pitch.
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Once again, warning bells should be ringing when they're pitching a lifestyle and not a detailed plan. The plan should be the product, and what they are selling. If they are selling dreams, they are full of shit.

Cassimatis had been in the financial sector in various guises in Townsville for about 20 years originally selling insureance.
He was highly respected and gathered the reputation of local man makes it big, the local you can trust his and his firms face was regularly on the TV. His offices in Townsville were opulent to say the least and he built the largest and most expensive mansion in Townsville. He oozed money and his pitch was to try and help everyone else if you follow my plan you too can have the good life like me.
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This is the saddest thing, in that he's abused his position amongst his community for money. I hope for his sake that he truly believed his strategy.

I am very conservative investment wise, and was not convinced the storm way was for me. The storm staff then repeatedly told me that this was a once in a life time opportunity and I was going to deprive myself and my family of a independant wealthy happy lifestyle and this was a big mistake.

Cassimatis is a parasite he openly leached of the less financially educated people in North Queensland to invest with him relying on the false media speculation about him being a leading investment advisor.
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At least you realised that you are a conservative investor, and made the decision. Unfortunately a lot of people don't know what type of investor they are, and once they decide to trust someone like Cassamitis, they trust him absolutely.

The Townsville paper has had a lot of stories about battlers having to sell there family homes because of there investments with Storm, tragic stuff. Good honest hard working people that were financially ignorant were his target (cane farmers, ex military veterans on pensions, cashed up fly in fly out miners)The man his wife and his firm are criminal and should be prosecuted. Storm financial have sullied the name of Townsville and honest financial advisors nation wide.

Another reason to hate him is he wouldnt sponsor our local footy side because he did not like aussie rules.
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He sounds like a right ****.
 
A good rule of thumb when getting advice is to always have the question in the back of your mind "how does this relate to my personal goals/views?"

Everything a planner/agent/seminar guru etc. recommends should be backed up by an actual, solid reason - and that reason should then be applied to your personal situation to show relevance.

And most importantly, never stop asking questions. If you're seeing a planner or agent, chances are you don't feel confident in your knowledge of investment, just like most people don't feel confident in medicine, so they see a doctor. But of you go to the doctor and he prescribes you a certain medicine, or tells you you are sick, you don't just accept it and take the tablets, do you? You find out what the details are.

I literally can't get over the strategy of 'borrow against your primary residence now to invest in stocks before the real estate crash'. I mean, I agree real estate is heading for some very lean years, possibly a severe crash, but anyone worth his salt should know that if real estate is heading south, the share market is going to be affected, so continually borrowing (as I understand their strategy was to continually keep re-financing and investing, regardless of gains or whether anyone was happy with how much they'd made).

This is why the sub-prime crisis caused the credit crunch which has caused the global stock market crash.

If banks are lending money to finance bad assets, why would you borrow against those assets to invest in those banks? And considering EVERY sector is reliant on the finance sector, why would you be borrowing against property, which you predict to soon crash, to invest in assets that are sure to crash if property does? Hindsight is 20/20 but clearly Cassamitis knew property was heading southward, how he didn't make the logical conclusion that it would have a knock on-effect is beyond me.

I know its a bit of a broken record to most investors, but diversification is still the best way to stop yourself getting burned. When you start to get too tricky with it, and putting more on the line than you can afford to lose, you can end up in serious trouble. For some people that's fine, they are risky people by nature and are ok with losing money because they can afford to take a shot at the big time. For 99% of the population, they just want steady growth over time, and security. Heavy leveraging into 100% stocks is simply not appropriate for them.
 

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