Anthony Marx The Courier-Mail September 25, 2012
BANKS earned huge profits while clients of investment firm Storm Financial lost their life savings, a court heard yesterday.
The twice-delayed Australian Securities and Investments Commission case against Macquarie Bank and the Bank of Queensland, who lent money to Storm investors, started in a packed Federal Court in Brisbane yesterday.
The corporate regulator alleges the two banks were involved in an unregistered managed investment scheme and has sought injunctions against them
ASIC counsel Allan Myers, QC, told the court that the banks had earned huge profits while Storm clients were left with "devastating losses" when the sharemarket collapsed in late 2008 at the start of the global financial crisis.
He said Storm heads Emmanuel and Julie Cassimatis had dispensed "standardised" advice to inexperienced clients to borrow heavily to invest in Storm-badged index funds.
Mr Myers attacked the Townsville-based operation as a "well-oiled system" like a production line that was highly profitable but also peddled "nonsense" at seminars.
The banks had a full understanding of what their clients were investing in but they were motivated by profit and now want to wash their hands of involvement, he told the court.
The case continues today and is expected to last two to three months.
Two separate class actions against the Commonwealth Bank and Macquarie Bank will follow the ASIC case.
ASIC reached a controversial out-of-court settlement with the Commonwealth Bank earlier this month and, in a separate case, is pursuing the Cassimatises.
Retiree Mark Weir, who heads the Storm Investors Consumer Action Group, said evidence given in court showed the company and the two banks had extremely close ties.