ASIC admits to Storm Financial complaints
The Australian Securities and Investments Commission (ASIC) has admitted in a parliamentary hearing that it received four complaints relating to Storm Financial between 2006 and 2007.
Nationals Senator for New South Wales John Williams said ASIC yesterday admitted it investigated Storm over what it called ‘minor complaints’ but did not consider the group a ‘smoking gun’.
The admission was made during discussions at the Senate Standing Committee on Economics, which included ASIC chairman Tony D’Aloisio and the Minister for Superannuation and Corporate Law, Senator Nick Sherry.
In ASIC's statement to the committee, D'Aloisio said the regulator is "now in the process of reviewing its contacts with Storm and complaints to ASIC about Storm".
"What we can say at this stage is that, prior to 2006, there were a number of communications between ASIC, Storm and its officers based on routine ASIC surveillance in Queensland of financial planners," the ASIC statement said.
But ASIC said any issues raised during the surveillance activities, "generally about disclosure issues", were resolved at the time.
"During 2006-07 ASIC received four complaints about Storm in relation to its Statements of Advice and fee levels," the statement said.
But ASIC argued that none of these complaints were from Storm clients and that the issues did not involve "any examination of Storm's advisory model or use of aggressive leverage".
Instead, the issues concerned disclosure and fees, ASIC said, and were "addressed by Storm at the time".
ASIC said it then received a "number of complaints" from investors on October 31, 2008, which it then reviewed and followed up with various enquiries.
It was in October last year that Challenger, one of the groups associated with Storm, began selling down stocks of Storm Financial clients facing margin calls.
In the hearing, Senator Williams queried why Storm Financial investors with margin loans spiralling into negative equity were “not alerted at a point where they may have been able to manage their debt, rather than being told by the banks their shares had been sold and they still faced a large debt”.
ASIC said responsibility for monitoring the portfolio lay with the investor, Storm Financial and the banks involved.
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