The Australian Securities and Investments Commission has admitted that it was aware that collapsed financial planning group Storm Financial was in trouble in October, two months before the company was placed in the hands of administrators.
According to report in The Australian Financial Review, the corporate watchdog now says it was monitoring Storm from November and started asking questions in November, when Storm founder Emmanuel Cassimatis wrote to investors, telling them to get out of index funds and into cash.
While the letters prompted the Financial Planning Association to expel Storm from its membership, ASIC decided not to take action after questioning Cassimatis.
Since the company collapsed in early January, ASIC has launched a full-scale investigation and last week ordered the freezing of a $2 million payment Storm made to Emmanuel Cassimatis and his wife Julie just two weeks before the company went under.
The couple has reacted angrily to suggestions from the Commonwealth Bank, which provided margin loans to many Storm clients, that ASIC’s decision to freeze the payment was “in the best interests of the investors affected by the Storm Financial collapse”.
“I’m not sure how the ASIC action is in the best interest of affected investors when that money will go straight back to the main creditor – the CBA. How is two extra million in the bank’s pocket going to assist anyone except the bank?” Emmanuel Cassimatis wrote on a special website that has been set up by the besieged couple.
On the site they address claims their private jet has been seized by receivers (not true they say, the pair put it up for sale themselves) and declare that the $2 million payment was a “normal dividend payment”.
Users are also invited to address questions to the couple through the site, although investors will hope ASIC is a bit more direct in its questioning.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
