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Lateline obtains corporate video from Storm Financial's glory days

Broadcast: 06/02/2009

Reporter: Conor Duffy

One of the toughest stories of hardship since the global financial crisis hit last year has been
the collapse of Storm Financial. But at the peak of the boom it was a different story - Lateline
has obtained a corporate video showing favoured Storm clients enjoying a first class European
holiday

Transcript

LEIGH SALES, PRESENTER: Of all the bad news in Australia since the global financial crisis hit last
year, one of the toughest stories of hardship has been the collapse of Storm Financial. With the
financial planning business going into administration, many of its 14,500 clients now stand to lose
their life savings.

But at the peak of the boom it was a different story. Lateline has obtained a corporate video
showing favoured Storm clients enjoying a first-class European holiday. Conor Duffy reports.

EMMANUEL CASSIMATIS, STORM CO-FOUNDER: It was a bunch of good people, more than 400 Storm clients,
some staff, all having the most fantastic time of our lives. It was exquisite.

CONOR DUFFY, REPORTER: In May, 2007, Storm Financial's co-founders Emmanuel and Julie Cassimatis
took favoured clients on the holiday of a lifetime. It included a dinner and dance party at a 15th
Century castle with a private performance by Tina Arena.

EMMANUEL CASSIMATIS: Entertainers - great. Tina Arena - fantastic. Standing ovation.

CONOR DUFFY: These days, large groups of Storm clients are more likely to gather in halls to
discuss who is to blame for the loss of their homes and life savings.

EMMANUEL CASSIMATIS: How does it feel to know that our advice has ruined these thousands of
people's lives? Look, that, the wording of your question has an embedded assumption and that is
that the advice ruined them. Our advice did not ruin anybody. It's the actions of individuals and
corporations in the worst crisis in history that precipitated that.

CONOR DUFFY: Lyn Murray from the NSW South Coast couldn't disagree more. She joined Storm when the
company bought out her financial planner. Ms Murray says her investment plan became much more
aggressive. Her house was mortgaged and the proceeds used to get a margin loan.

LYN MURRAY, STORM CLIENT: My margin loan started off at $400,000 and within just over 18 months, it
was basically up to the $800,000s.

CONOR DUFFY: And that was Storm continually telling you to up the amount that you were investing?

LYN MURRAY: Correct.

CONOR DUFFY: And to borrow to do so?

LYN MURRAY: Correct.

CONOR DUFFY: Now Lyn Murray is losing the home she loves.

LYN MURRAY: I must say, the last sort of eight months have been just horrific, really.

CONOR DUFFY: Critics have said that the Storm model was flawed because it left investors so heavily
geared they had no hope of servicing their debts during a long share market fall.

EMMANUEL CASSIMATIS: I don't think so. That the proof at that is that we've had decades where it
has worked beautifully.

CONOR DUFFY: Storm's co-founder, Emmanuel Cassimatis, says the blame for the company's collapse
lies with the Commonwealth Bank and he says he's now on a crusade to get as much money back for
Storm clients as he can.

EMMANUEL CASSIMATIS: The moral responsibility is absolute. I mean, we have people out there that
are bleeding and till the moment I draw my last breath, we are going to work as hard as we can. I
am going to work as hard as I possibly can to find justice for all of these individuals.

CONOR DUFFY: But all along, the CBA has said that Storm was responsible for the advice it gave its
clients and has called for an investigation. And Lyn Murray says she was constantly reassured by
Storm Financial that everything would be fine, even as she was watching the value of her investment
plummet.

LYN MURRAY: It has just been six months of just sheer and utter hell, honestly - sheer and utter
hell. It was like being on the Titanic and I was one of the people that couldn't get a life guard -
a lifeboat, sorry, a lifeboat. I just had to wait for the ship to go down and I didn't understand
why they couldn't sell me up.

CONOR DUFFY: Storm Financial's relationship with the banks was once much rosier. Emmanuel
Cassimatis says that in 2007, Macquarie Bank, Challenger and CBA subsidiary Colonial chipped in
about $200,000 which he used to sponsor events on the European holiday. Now, Macquarie Bank is
charging Lyn Murray a break fee of more than $16,000 to pay out her margin loan before it's due to
expire. She says the fee is unfair and will make it harder for her to get a fair price for her
house.

LYN MURRAY: It gives me five more months of living in this house until hopefully the market picks
up and I can get what the house is actually worth, rather than a fire sale. So, yes, it's very
important to me. It means an awful lot, really.

CONOR DUFFY: The Commonwealth Bank is also charging distressed Storm clients break fees. Both banks
have defended the charges, saying they're not making a profit on them. That's not much consolation
for Lyn Murray who received an $8,000 loan from Storm to help with expenses. It's not enough to
keep her going, and like hundreds, possibly thousands of other Storm clients, she and her son
Michael Shannon are looking at some tough options, including living in her son's shed.

Emmanuel Cassimatis says he's also lost everything and he insists that not a single Storm client
would have lost their homes if he'd been able to keep advising them.

EMMANUEL CASSIMATIS: Even now, as I get calls from clients and I'm not in a position to be able to
advise them, I know fully well what they should be doing and I know fully well how they can
manoeuvre themselves back into a better position.

CONOR DUFFY: The number of Storm clients that lose their houses could end up being in the
thousands. Conor Duffy, Lateline.