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ASIC strikes ‘dirty deal’ in Storm case

Posted by on in COURTS & LEGALS
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Two Months old, but it highlights ASIC's approach.  Note Mr Robinson's comments about ASIC's dirty backroom deals...

Full Story:

The 11th-hour settlement deal between ASIC and the Commonwealth Bank of Australia (CBA) in the Storm Financial saga was “calculated to inflict damage”, according to the lawyer heading up a class action against the bank.

CBA struck a deal with ASIC at 4.22pm on Friday (14 September) – the business day before the resumption of court proceedings, which have now been postponed by a week. The settlement will offer Storm investors up to $136 million in compensation above what has already been paid. While it has been widely reported that investors lost about $3 billion when the financial services company folded in 2009, ASIC has claimed the figure is closer to $830 million.

The deal ends the court battle between ASIC and CBA, but the bank is still fighting a class action launched by Levitt Robinson, which is representing around 300 Storm investors. Stewart Levitt (pictured), principal solicitor at the firm, told Lawyers Weekly that his case has not been weakened by ASIC’s decision to settle.

He does concede, however, that the deal was “calculated to inflict damage”.

“It was a tactic to try and unnerve the people we represent ... [ASIC] gave us no notice of the position [and] appeared gung-ho about the matter up until the end of last week.”

Levitt accused the financial watchdog of engaging in “backroom dirty deals” with CBA and failing to include Storm investors in settlement negotiations.

Under the agreement, investors would recover about 55 per cent of their total loss “allocated to the CBA”, ASIC revealed in a statement. The “allocated” amount refers to money that was borrowed from the bank (which provided margin and home loans to Storm investors) to invest in Storm.

This deal is also available to around 1000 Slater & Gordon clients who accepted compensation under the CBA Resolution Scheme in 2010. The terms of the previous agreement included a “carve-out” clause entitling clients to participate in a settlement scheme between CBA and ASIC.

Ben Hardwick, practice group leader with Slater & Gordon’s commercial and project litigation group, told Lawyers Weekly that his clients can now “top up their compensation entitlement”. These investors will need to account for any cash compensation or loan reductions, but won’t be penalised for accepting interest rate waivers, reduced interest rates or flexible loan arrangements, he added.

“[Our clients] have been adequately compensated ... they haven’t had to pay any legal costs and they now have a second bite of the cherry,” Hardwick said.

He warned Storm investors who plan to decline ASIC’s offer and participate in an investor class action that if they lose in court they will miss out on compensation altogether.

“Their destiny will be in the hands of the court,” he said.

CBA has not admitted liability in relation to either settlement.

ASIC had accused CBA of acting unconscionably by selling an unregistered management investment scheme to Storm customers prior to its collapse. The regulator revealed it will continue its unregistered management investment scheme proceedings against Storm, Bank of Queensland and Macquarie.

These court proceedings will commence next Monday (24 September).


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  • doyla66
    doyla66 Saturday, 17 November 2012

    Someone define 'adequate', please. Adequate to whom? Those twits at ASIC? Adequate to SLaG or, adequate to the CBA? For heaven's sake, they're using that dropkick law firm, SLaG & that puts them behind the 8-ball before they've even begun.
    I've had first had dealings with those idiots at SLaG & it ain't good. They didn't gain the moniker to be known as the 'ambulance chasers' for nothing. SLaG would have to be the publicity sluts of the legal profession. This week in the 'Mandurah Mail', that lawyer (Wayne Burg) who sold me down the tube to BastardWest was quoted giving warnings to school leavers. So does this mean SLaG are going to become 'schoolies chasers'?

  • doyla66
    doyla66 Saturday, 17 November 2012

    How dare ASIC do this to the Storm investors? That's despicable conduct. I'm glad Mr Robinson had the decency to expose them for what they are - slimy cowards - and to explain how this conduct adversely impacted the Storm victims.
    CBA lack the integrity to accept the blame for their sweetheart deal with Storm and Financial people at the expense of the Storm Investors - a double betrayal.
    How dare those unenlightened fools call that "adequate" - it's not their money.
    What I don't understand is why Storm people aren't using the BFCSA approach to get their LAFs, checking for loan fraud and at least getting their loans frozen while they wait for compensation.
    Then they could look forward to further compensation.
    Dirty, disgusting, gutless and disgraceful ASIC and CBA.
    Financial people: it's not your money so wake up and start thinking like decent human beings. That's what the world wants and needs now.

  • doyla66
    doyla66 Saturday, 17 November 2012

    The problem is that SLaG would not know to ask about the LAF. That most basic, foundational piece of highly important paperwork is beyond the comprehension of those idiots.
    Denise's service is far superior by far.
    As Bruce Ford of told me at the time I was having trouble with BastardWest when I made enquiries to him, most lawyers have to be taught what questions to ask when dealing with banking matters & you are the bunny who is paying for their education. I contacted him when I was getting frustrated with Wayne Burg of Perth's SLaG office & that ditzy blonde barrister they engaged. Unfortunately for me, Bruce Ford was 'on the money' with his comments.
    This outcome for Storm still comes back to that definition of 'Adequate'.

  • doyla66
    doyla66 Saturday, 17 November 2012

    Adequate - who defines what's adequate?
    If Storm investors didn't consider their compensation was 'adequate' then it isn't.
    I think what was meant by the blanket "adequate" was "they were lucky to get anything and should just shut up and go away because it's all their fault".

    So true about lawyers - most of them have a lot to learn.
    Watch them try to capitalise on the potential new market of bank fraud resolution - where most people are too broke to pay them!
    It would be helpful if all lawyers got some real time work experience as voluntary advocates and also learned to really listen to their clients. I'm not interested in engaging in debate with lawyers who think they know it all, have egos to match and put me down for following alternate dispute process to resolve loan fraud and other forms of business conflict. Hitting people with legal instruments may be their preferred tools of trade but it doesn't necessarily produce the best result for their clients - from experience.
    I had one legal person who was interested but a few questions showed that she needed a real education and I didn't have the budget or the time to send her back to school to learn. I sent her to the BFCSA site. There is so much more to this than even what's on the BFCSA site, especially at the coal face.

  • doyla66
    doyla66 Sunday, 18 November 2012

    "Cover Up" is the name of the game CBA subverts & stops ASIC's investigation & public exposure of its illegal acts

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