The former directors of Storm Financial, Emmanuel and Julie Cassimatis, have both been fined $70,000 by the Federal Court.
The Federal Court has imposed civil penalties of $70,000 on both Emmanuel and Julie Cassimatis, who were found to have breached their duties as directors of Storm Financial in August 2016.
The court action marks an end to ASIC’s Storm-related litigation, which also resulted in the pair being disqualified from managing corporations for seven years.
The Cassimatises operated what ASIC calls a ‘one-size-fits-all’ investment strategy that involved double-gearing into index funds.
From 1994, clients were advised to take out both home loans and margin loans to purchase units in index funds, creating a so-called “cash dam” that helped pay Storm’s fees.
By the time Storm collapsed in early 2009, approximately 3,000 of its 14,000 clients had been placed into ‘Stormified’ strategies, leading to negative equity positions and significant losses, according to ASIC.
In the original judgement, Justice James Edelman found the ‘Stormified’ clients received advice that was inappropriate to their personal circumstances.
“Each of those investors were over 50 years old, were retired or approaching and planning for retirement, had little or limited income, few assets and had little or no prospect of rebuilding their financial position in the event of suffering significant loss,” ASIC said.
Justice Edelman found the Cassimatises had each engaged in a course of conduct that amounted to one breach of the requirement that they exercise their powers as directors with the degree of care and diligence that a reasonable person would have exercised in that situation.
The maximum penalty for a breach of directors duties is $200,000.
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