The founders of beleaguered financial planning group Storm Financial have broken their silence, revealing they lost a “significant amount of money” and are “in the same position as some clients now, or worse”.
The founders of beleaguered financial planning group Storm Financial have broken their silence, revealing they lost a “significant amount of money” and are “in the same position as some clients now, or worse”.
Emmanuel and Julie Cassimatis, who founded the Townsville-based advisory chain 35 years ago, have given their first interview to the Townsville Bulletin, just weeks after fund manager Colonial First State terminated its four Storm-branded index funds and began hitting Storm clients with margin calls.
Many Storm clients say they have lost the bulk of their life savings after following Storm’s investment philosophy, which involved the use of margin loans to “amplify” investment returns.
The massive fall in financial markets in recent months means many Storm clients are heavily in debt.
But the founders have assured investors that they feel their pain.
“We have all followed the same investment and lending within our portfolios, have our homes mortgaged and have suffered the declines in the markets due to the financial crisis. We are also a large part of the negative equity issue,” the pair wrote in response to questions from the Townsville Bulletin.
“While this is no consolation, we are sure it proves we have not acted differently for ourselves. Being in the front line of course makes us the first casualties, and as such the Storm group accounts for the biggest losses alongside the group of clients that are in that position.”
The Cassimatis couple say Storm has been hit by a “black swan” event. “Our strategy was quite conservative. What happened, and what is happening, is literally unprecedented. Most advisers, banks and market investors did not anticipate the market changes.”
But the company’s future appears to be less than clear. When asked “where to now?” for Storm, the two answered: “Time will tell.”
“Unless forced into another position, Storm expects to continue to support clients as it always has through the good times and bad into the future.”
Emmanuel and Julie Cassimatis were claiming one minor victory yesterday over Commonwealth Bank, which owns Colonial First State.
Storm went to the Federal Court on 24 December to apply for an injunction preventing Commonwealth Bank from further communicating with its clients.
Storm argued that letters the bank sent to Storm clients in early December were misleading and may have exacerbated client losses.
Storm Financial’s application also included an application for mandatory corrective advertising, which was dismissed by Justice Greenwood and the matter is set to return to court in early January.
But the judge did say Storm had “demonstrated a sufficient likelihood of success” of proving some of the communication between CBA and the Storm clients was “capable of being misleading or deceptive or likely to mislead or deceive”, although Justice Greenwood said the matter would need to be tested at trial.
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