(25 November 2010 – Australia) The Australian Securities and Investment Commission (ASIC) will sue three Australian banks over the collapse of Storm Financial.As well as the lawsuit, to recover investors’ losses, ASIC has launched civil proceedings against the founders of Storm Financial, Emmanuel and Julie Cassimatis.
The Commonwealth Bank of Australia, Bank of Queensland and Macquarie Bank Ltd assisted in providing Storm Financial’s finance arrangements that in many cases wiped out their life savings.
Around 3000 mainly elderly investors lost about A$3 billion because of the failure of Storm’s business model.
ASIC chairman Tony D’Aloisio made the announcement after reviewing the adequacy of the compensation arrangements being offered by the banks to some of the 3000 clients of the Townsville-based group which collapsed in late 2008.
Emmanuel and Julie Cassimatis, who founded Storm, will be charged with breaching Section 180 of the Corporations Act which covers the duties of directors to act with care and diligence.
Mr D’Aloisio said the action against the banks will not be filed straight away. This is to provide the banks’ time to continue with talks with representatives of the losing investors.
Mr D’Aloisio said that ASIC had been putting off starting legal proceedings in the hope that those bank talks would produce what he called an ‘acceptable commercial solution’ but that ‘in the circumstances, it was not possible for ASIC to continue to defer the decision to commence legal proceedings’.