BOQ and Macquarie left in Storm Financial litigation
The Commonwealth Bank (CBA) has effectively withdrawn itself from further action surrounding the collapse of Storm Financial by increasing the scale of its compensation offer by $136 million, leaving the Australian Securities and Investments Commission (ASIC) to deal with Macquarie Bank and the Bank of Queensland.
ASIC chairman Greg Medcraft confirmed on Friday that the Commonwealth had agreed to make up to a further $136 million available as compensation for losses suffered on investments made by Storm Financial.
He said the compensation would be available to many CBA customers who borrowed from the bank to invest through Storm, including bank customers who were members of the Sherwood class action brought against the CBA.
ASIC said the agreement reached between it and the bank also provided other benefits to Storm investors who borrowed from the CBA:
- if, after compensation is applied to an investor's outstanding Storm-related margin loan, the investor is still in negative equity on their margin loan, the balance of the loan will be written off; and
- an investor granted an interest payment moratorium by the CBA will have that moratorium interest written off.
In return for the CBA entering into the agreement with the regulator, ASIC has agreed to bring legal action against the bank to a close.
However, Medcraft made clear the regulator would be continuing proceedings against Storm Financial, the Bank of Queensland and Macquarie.
He justified the agreement reached with the CBA by saying that it had achieved the objective of obtaining compensation for Storm investors "without the need for long, costly legal proceedings that brings with it a level of uncertainty".
Medcraft said Storm investors could be confident ASIC would not have agreed to a settlement unless it believed the compensation was appropriate.
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