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.
It is not only those two who should have lost everything, like their clients did, clients were either referred by their own Accountants to Storm Financial advisers. The accountants then received a handsome referral fee from Storm. From my understanding not one Storm Authorised Representative had to face the music. Many of these advisers are still AR’s today. Many people lost Millions of dollars some even had to sell down significant assets like cattle stations.
You have got to be kidding. Those 2 should be in jail for all the lives they ruined
Do we know if they were degree qualified because if so this would never have happened! $70,000 nine years on? What a joke!
Cassimatis has a Masters of Applied Finance according to the Bloomberg profile for him.
When I first saw this – I thought that I must have misunderstood what I was reading – Storm failed in early 2009 – that is, this case concerns events that happened more than 9 years ago – in fact, they occurred pre-GFC – so this case concerns things that happened more than 10 years ago in circumstances where ASIC has been well aware of this matter since early 2009.
So in summary ASIC fails again, but somehow tries to spin this as a win for clients? I bet all the Storm clients that lost money while ASIC was asleep at the wheel (even after others reported Storm’s activities to them) are really happy that after almost 10 years ASIC gets fines of $70,000 each.
I know the fine looks very low – but with double gearing it might end up being in the millions!
Attention ASIC , FASEA , they had a degree and did there CPD points ??? and there opt ins and opt outs and they had a FDS and lovely FSG . HMMMM ………… is their something you are missing ? AXA dobbed them in and ASIC did nothing for months
Mate, without year 2 English you should not be giving advice to clients..
Correct your own punctuation up. The should not be two full stops at the end of your sentence.
Douglas your first sentence is very bad English. The second sentence has a spelling mistake, “the” instead of “there”.
You must get it correct mate if you are correcting someone else!
bigal. You’ve repeated myself. I was merely attempting to point out the childish comment of the second git ( I suspect u) that focused on correcting the spelling of the original poster as opposed to making any real and meaningful reply. Trying to belittle someone’s comments by pointing out their grammar is like me saying “come to my office and tell me this to my face & I’ll headbutt you.” Even myself, as you correctly picked up, can make mistakes. Have a great day and I’d encourage readers like you, try adding real meaningful thought or argument next time, as opposed to the personal comments, trolling and bullying.
This is hilarious. Like listening to a bunch of 2nd graders.
Douglas, were you by any chance drinking when you posted those comments? I do hope so, as any other explanation would be even sadder than that. On another note, I agree with the points you were ‘trying’ to make.
$70,000 each and theyre still laughing. The fine is a joke, surely.
Sure that they arent related to Greg Medcraft somehow? Appallingly lame penalty just like that issued to his cousin. Rip off millions and get hit with a wet lettuce. Have a small oversight, be late issuing an FDS and you’re hit with mega-fines and get banned from providing advice for years.
They single-handedly cost each and every financial planning practice more than that in additional costs brought about as a result of their actions. This is hardly an appropriate fine for the hurt they caused their customers and our industry.
What an absolute joke! These two have lost millions of dollars of clients money, caused heart ache and heart break and ruined countless lives while they made millions of dollars and even operated a private corporate jet.
And they get a $70,000 fine each and seven years on the bench, a slap over the wrist. This is an outrage and I trust the Queensland Attorney General or ASIC will appeal this punishment.
It makes a mockery now of all the current carry on and threats to advisers about not acting in the clients best interest.
Correct ‘bigal’. ASIC and all the other involved authorities should be abjectly [b]ashamed of themselves[/b][b][/b] and handing in their respective resignations and apologies to the poor unfortunate clients they failed to protect. Disgusting level of support from a regulator – they should hang their heads in shame and sorrow – after they resign [b]and let the adults monitor the industry!![/b]
Curious that you direct your fury at ASIC, yet no comments I can see here about Management at Colonial Geared Investments – at least one of whom gave evidence in the Federal Court about their sponsorships and the Storm business. So by your logic, Steve Smith doesn’t have a case to answer, the ball tampering was all the fault of the Cricket Australia as the governing body.
One would think this should be appealed ? Sends a message for everyone to do it and pay the fine out of lose change . Am I the only one who thinks this is a joke ?
$70,000? After ruining and financially devastating all those lives? Pathetic. How can an inside trader cop more significant penalties including potential jail time, and these ignorant & greedy life destroyers get away with that?
Are you kidding, a slap on the wrist!!!
This is why people get away with this kind of advice, should have been at least maximum each!!
This is a joke. $70K fine and as a result of their actions we get FoFa, opt in, best interest obligations, margin lending courses, additional training. I’ve lost $70K in lost business just because of the negative perception of planners they helped to create.
Cassamatis scum bags should be in jail and assets seized to assist those investors who lost fund! Crap Aust. Justice
What only $70000 no criminal record. Judges standard of punishment is not consistent.
I agree with disappointed. Each of the 3,000 Stormified clients is worth a lousy $46 towards the total $140,000 fine. What a disgrace!
Who would be responsible for launching an appeal against the inadequacy of the fine?
Thanks to Storm the whole industry has been pulled apart as authorities blame their decisions on commissions and education using the Storm activities as examples. $70,000 is peanuts for the damage they’ve created to clients and the industry in the IFA space which they were not a part of.
One wonders what you must do to get the maximum fine.
Indeed. Here we go again – what incentive or message is the judiciary sending by such a lenient sentence/fine? Thank God they didn’t forget to cross the letter ‘T’ or dot an ‘i’ in one of the SoA’s – they may have gone to hail for such an admin stuff up. ASIC is big on such ommissions in SoA’s I hear. Just no consistency at all in dealing with low-lifes in our industry. They should be OUT for GOOD . . . AND fined the $200K EACH.