Storm Financial heads fined $70,000 each
Storm Financial's plummet from lucrative heights to debts of $88 million cost thousands of vulnerable investors everything they had, and the couple behind the company have been fined $70,000 each.
The penalties against Emmanuel and Julie Cassimatis, which also include a ban from managing corporations for seven years, were on Thursday confirmed in the Federal Court.
They had been before the courts since 2010, when the Australian Securities and Investments Commission (ASIC) began civil proceedings after the company folded in 2009.
In 2016 they were found to have contravened their legal duty to do their job with "care and diligence".
For two years the pair had given inappropriate financial advice to retired or near-retired people with few assets and a limited income. The victims lost it all when the global financial crisis hit and Storm's aggressive model backfired.
"They (Cassimatis) focused on managing Storm's profitability and paid too little attention to the interests of vulnerable investors," Justice John Dowsett said.
Investors had been lured to Storm by its apparent success.
A year before it buckled the company's annual revenue was $77 million and it had $120 million in assets.
Clients were advised to borrow money against their homes to fund investments in the ASX300, which is made up of Australia's 300 largest companies.
"Some of the relevant investors lost their family homes, or incurred lengthy postponements of their planned retirements," Justice Dowsett said.
"By failing to give reasonable consideration to the circumstances of the relevant investors, Storm provided inappropriate advice which exposed the relevant investors to these devastating consequences."
During Federal Court hearings in 2016 it was determined the pair had breached the civil, not criminal, duties of directors stemming from the Corporations Act.
Simple precautions could have helped Storm avoid giving inappropriate advice to vulnerable investors, the court found.
The maximum fine that could have been imposed was $200,000.