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ASIC rejects criticism on handling of Storm Financial

ASIC rejects criticism on handling of Storm Financial

The Australian Securities and Investment Commission (ASIC) has rejected criticism about its role in dealing with the collapse of Storm Financial in a submission to a Federal Parliamentary…

The Australian Securities and Investment Commission (ASIC) has rejected criticism about its role in dealing with the collapse of Storm Financial in a submission to a Federal Parliamentary inquiry.

The corporate watchdog defended accusations that it should have done more to prevent the collapse, after Storm Financial went into administration in January.

More than 400 Storm clients have been affected, after the Federal Court ordered the company's winding up in March due to debts of about $80 million and they are now working on a settlement with the Commonwealth Bank of Australia (CBA), which had responsibility for about 30 per cent of the loans.

ASIC documented the history of its dealings with Storm since 2006 in the submission.

Routine ASIC surveillance in Queensland on financial planners did reveal some "financial disclosure matters" between Storm and its officers, but these were resolved prior to 2006, said the watchdog.

Four complaints were received in relation to statements of advice and fee levels in 2006/07 but Storm addressed these at the time. A financial advisory firm made an anonymous call to ASIC in early 2008 to complain about Storm but it was "not able to take that further", the submission said.

In October 2008, complaints from investors prompted a formal investigation which is scheduled to release its report at the end of August.

"Neither the earlier surveillance work nor the more recent complaints on the work we have done so far provided ASIC with a smoking gun," the submission said.

ASIC said it was attempting to do all it could to recover money lost by investors but rejected implications that it had reassured Storm investors.

"We do not have any record of ASIC officers telling prospective Storm clients that the investment was fine," it said.

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ASIC rejects criticism on handling of Storm Financial
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