Former Storm Financial boss blames failure on ASIC manipulation
Former Storm Financial head Emmanuel Cassimatis has alleged the failure of the group was brought about by the Australian Securities and Investments Commission (ASIC) manipulating evidence to achieve a predetermined outcome.
The claim was made by Cassimatis in his submission to the Senate inquiry into the performance of ASIC, with Cassimatis also alleging that ASIC worked in concert with the Commonwealth Bank of Australia (CBA) to make it appear Storm had failed to manage its clients' leveraged equities investments.
In the submission Cassimatis alleges that Storm failed because CBA did not provide its clients with margin call notices in late 2008 and that ASIC and CBA then proceeded to cover this up by moving the blame for the failing onto Storm.
Cassimatis alleges that CBA complained about Storm to ASIC - which in turn launched an investigation into Storm that kept Storm from responding to CBA's claims about Storm activities.
He also claims in the submission that ASIC gagged Storm and its advisers by issuing a formal enforceable undertaking at a time when ASIC did not regulate credit products and margin lending products. As a result Cassimatis states that ASIC acted outside its jurisdiction and the formal enforceable undertaking was issued after pressure was placed on Storm directors.
Cassimatis also criticised ASIC's response to other industry failures, stating that it had the powers to prevent failures but did not use those powers or misused them when it did apply them.
"The fact that so many failures exist must mean that there are barriers in preventing ASIC from fulfilling its legislative responsibilities and obligations," Cassimatis stated in the submission.
"However such barriers lay not in the enabling legislation but rather in the inability of ASIC personnel to apply the power that already exists within the legislation to substantive issues that require policing.
"On many occasions ASIC squanders resources on micro managing small issues that are consequences rather than correctly identifying the initial causes of such consequences which often have great social impact."
He also stated there was no point in ASIC being granted further powers and resources when its ability to use its current powers was lacking and while ASIC was unable to correctly identify issues which needed regulatory oversight.
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