Reporter : Ted Baxter
Content : ASIC case against Storm inaccurate: banks, Storm praised by ASIC Investors ‘in control’, Macquarie UMIS, ASIC court case against Storm, Macquarie barrister John Sheahan SC, Deborah Koromilas ASIC.
Tuesday 2nd October 2012
Oh what a ta
ngled web we weave, when first we practice to deceive!
(Sir Walter Scott).
If it weren’t for the tragic circumstances that CBA’s and now ASIC’s victims now find themselves in, ASIC’s mischief to deflect the spotlight from its own action would be laughable and worthy of an academy award.
On Thursday 27th Sept and Friday 28th Sept 2012, in response to the opening statements made by ASIC’s legal team earlier in the week, opposing barristers John Sheahan SC and Andrew Crowe SC made the following points which appeared to have drawn first blood. These comments were published in recent press articles titled “ASIC case against Storm inaccurate: banks” and “Storm praised by ASIC Investors ‘in control’”.
- That Mr Myers’ opening for the ASIC case was full of “irrelevance and inaccuracy”. – Sheahan
- That much of ASIC’s emphasis was on “mocking and sometimes defaming Emmanuel and Julie Cassimatis” even though they were not on trial – Sheahan. This point presumably was designed to sway the mind of Justice Reeves in preparation for his pending ruling in the upcoming Cassimatis strikeout submissions.
- Both barristers said the watchdog had misinterpreted the piece of legislation that defined managed investment schemes.
- Both barristers also said that Storm was simply in the business of providing financial advice and then monitoring its clients investments [leaving the banks to monitor the debt].
- Mr Crowe also criticised ASIC’s allegations that Storm failed to tailor their advice to take account of investors personal circumstances, saying there was evidence to disprove this.
- That there was “nothing special” about the Bank of Queensland’s business relationship with Storm, and that the bank gave similar reduced interest rates and other deals to non-Storm investors – Crowe.
- ASIC was launching into an unprecedented argument and using an “arbitrary construct” in manufacturing a case that could affect “hundreds of schemes”. ASIC was unable to produce ANY example where the central role of advising clients and monitoring their position came within being the definition of a managed investment scheme. – Sheahan.
- The court heard that a managed investment scheme includes characteristics such as whether investors money is pooled or whether members of the scheme lack day-to-day control over the operations of the scheme. Mr Sheahan said that investors had control whether they would listen to advice.
Finally, the following point was made by Mr Sheahan that The Plain Truth feels is extremely relevant and has been aware of for some time now…as has ASIC. To date, when asked on numerous occasions, ASIC has refused to confirm the below evidence preferring instead to say we have ‘no recollection’.
- Mr Sheahan pointed out that ASIC had in 2007 examined a prospectus for Storm’s proposed stockmarket float and not raised concerns about it operating a unregistered managed investment scheme. Mr Sheahan presented a letter from an ASIC officer who praised Storm’s processes for providing supplementary advice statements. “It may be a model that can be used by other licensees to assist in servicing the mass market,” the letter said.
The Plain Truth has heard claims made by the Cassimatis’ to the effect that ASIC has on numerous occasions praised Storm for their systems and procedures. This praise has not been limited to ASIC but has also come from university academics, other advisors and the Financial Planning Association (FPA) (click here for more detail). The praise by ASIC and others of Storm Financial has not been a one off incident but is a thread that weaves through the fabric of time from the inception of the Storm business in early 1990’s until the torpedoing of Storm by ASIC and the CBA on the 8th Jan 2009.
The most recent example of such co-operation and praise by ASIC was at a meeting in Storm offices on the 13th November 2007 where Deborah Koromilas (the ASIC officer at that time) praised Storm and expressed the wish that ‘other advisors had procedures and processes that were as good as Storm’s’.
This 13 Nov meeting was called by ASIC and attended by Deborah Koromilas (ASIC Financial Service Compliance – Assistant Director), Elizabeth Korpi (ASIC Compliance – Lawyer) and Belisa Jong (ASIC Compliance – Manager). The extent and the essence of the meeting was encapsulated in the following extract from pleadings and has been obtained from our source within ASIC.
- In the course of the meeting, the said officers of Storm:-
(a) communicated to the officers of ASIC:-
(i) the substance of Storm’s advice model;
(ii) the substance of Storm’s client education process;
(iii) an explanation of how the Phormula software system interacted with the services Storm provided to clients;
(iv) responses to all other matters about which they enquired;
Following the meeting Deborah Koromilas again informed Storm that it [ASIC] wished other advisors had procedures and processes that were as good as Storm’s. Deborah Koromilas although not denying that she said this, has refused to confirm it.
In a move that ASIC was unable to avoid, the letter presented to the court by Mr Sheahan has left ASIC between a rock and a hard place. We can’t wait to see what flawed logic ASIC will employ to again avoid the potential for them having to tell the truth.
The Editor
The Plain Truth,
PO Box 2783
New Farm QLD 4005
Content : ASIC case against Storm inaccurate: banks, Storm praised by ASIC Investors ‘in control’, Macquarie UMIS, ASIC court case against Storm, Macquarie barrister John Sheahan SC, Deborah Koromilas ASIC.
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