The fallout from the collapse of Storm Financial continues, with disgruntled clients expected to launch legal action in the coming weeks.
The fallout from the collapse of Storm Financial continues, with disgruntled clients expected to launch legal action in the coming weeks.
Van Moulis, principal from law firm Slater & Gordon, says his firm has received more than 230 expressions of interest from former Storm clients.
While Storm Financial is likely to be party to any litigation, Slater & Gordon’s strategy is to pursue the banks that were involved in the financial arrangements (including margin loans and other lending products) set up on behalf of Storm clients. These banks include Macquarie Bank and Bank of Queensland.
Moulis says the strategy of going after the banks is all about getting the most money for clients. “Any litigation in the nature of class action must have a pragmatic approach in regards to recovery.”
The eventual damages claim could be worth more than $100 million.
“It’s difficult to be definitive about the damages claim at this stage. It’s likely to be in excess of that, but it depends on the level of interest.”
Storm, which claimed to have more than 13,000 clients and $4.5 billion under management at its peak, collapsed into administration late last week after being unable to repay a loan of around $10 million from its main lender, Commonwealth Bank.
Former Storm clients and creditors should learn more about the collapsed group’s position on 20 January when administrators from Worrells Solvency and Forensic Accountants hold the first creditors’ meeting in Brisbane.
Storm and Commonwealth Bank remain locked in a legal battle over who was responsible for margin loans taken out by Storm clients with CBA and its subsidiaries.
Storm applied for an injunction against Commonwealth Bank in the Federal Court to stop the bank from further communicating with its clients. Storm claimed letters the bank sent to Storm clients in early December were misleading and may have exacerbated client losses.
Storm Financial’s application also included an application for mandatory corrective advertising, which was dismissed by Justice Greenwood, and the matter was adjourned yesterday.
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See also yesterday’s feature Five lessons from the collapse of Storm Financial
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