a top submission ( whistleblower?), page-5

P4

alarmingly high borrowing component in each client file. In short it should take whistleblowers seriously, rather than shunning them as troublemakers with an axe to grind.
Most of Storm’s clients were elderly, did not understand risk and margin loans and certainly did not understand the degree of risk lurking in Storm’s urge to “use your lazy equity in the home to buy more shares and then use those shares as security for a further margin loan” advice model. They did not understand that they were too highly leveraged, or even that they were entering into both a mortgage and a margin loan in their seventies, or that they had put their house on the line in the process, and risked losing the lot. The first they heard about margin loans was when it was called in.
Many Storm investors say they can’t recall completing loan documents, merely signing them. The details of overstated income to qualify for the loans were completed by either Storm advisors or perhaps even staff in the lenders’ offices, given the close relationship of financiers and Storm management. A small audit of these documents would have had alarm bells ringing immediately. That audit would have shown that the income stated on the documents for a 75 year old client would have been too high, or fanciful.
But ASIC did nothing. Five years later ASIC has laid no charges against Storm directors. Meanwhile elderly investors are dying and succumbing to dementia to the point where they will be unreliable witnesses in any court case that might eventually emerge. Head in the sand hoping it will all go away seems to be the aim.
More recently ASIC was embarrassed by the Sydney Morning Herald’s excellent digging and reporting when it dragged its feet yet again when CBA financial advisors blew the whistle on the loss making and high investment risk activities of a few rogue financial planners. It took ASIC eighteen months to act on the whistleblowers’ information of activities of some rogue CBA advisors and no charges have been laid against any of them. They have been spared fronting the courts. Instead, they were quietly ‘let go’. It is yet another enforceable undertaking signed on the quiet with very little detail made public by ASIC or the bank despite the rogue advisors being rewarded with high bonuses while they were dragging the investors’money in. All the details have had to be gleaned from SMH’s excellent reporting.
By contrast to its inadequate and far too late attention to Storm’s gigantic loss scam, and the rogue CBA Financial Planning expose, ASIC sprang to action and manned all its guns when a young anti mining activist, Jonathan Moylan, put out a mischievous press release in relation to funding withdrawal for a Whitehaven Coal development. The mischievous release fooled the market for a few minutes and Whitehaven shares fell briefly before recovering.
The only people hurt by this face press release were speculators who sold at the short-lived lower price. Investors who did nothing suffered no loss.
Yet ASIC went ballistic and felt compelled to throw the rule book at Moylan. Moylan is an easy target as he has no funds to defend himself, and because he admitted sending out the release. Moylan is an easy head on a stick for ASIC. It has his admission, has the press release and has on record the brief market movement.
The result is that Moylan faces expensive court proceedings, a criminal record, a possible 10 year jail term and a fine of half a million dollars. Well done ASIC. Moylan will have his head spiked on a stick,