ASIC moves to kill off Storm Financial

The Australian Securities and Investments Commission has applied to the Federal Court to wind up collapsed financial planning group Storm Financial, killing off a bid by founders Emmanuel and Julie Cassimatis to regain control of the company.

The corporate watchdog said it was moved to take the unusual step after the Cassimatises published an information memorandum on their website, explaining the couple’s plan to take over the company via a deed of company arrangement (DOCA).

“ASIC believes the information memorandum is misleading,” it said in a statement.

The DOCA involved returning control of the company to the couple so they could pursue a claim against Commonwealth Bank, which was Storm’s main lender and the main provider of margin loans to Storm’s clients.

Under the terms of the DOCA, creditors were required to drop all claims against the Cassimatises and other Storm staff, and also called for a controversial $2 million dividend paid to the couple to be returned to help fund the legal battle.

“ASIC’s application also raises the issue whether the DOCA is so flawed that it could ever be in the interests of creditors, and whether creditors could be expected to make an informed choice about the DOCA in any event,” ASIC said.

ASIC’s move means the creditors’ meeting planned for 23 March will be scrapped. Instead, the Federal Court will hear ASIC’s application on 24 March. If the application is unsuccessful, the creditors’ meeting will go ahead on 30 March.

Emmanuel Cassimatis has reacted angrily to ASIC’s move, claiming the regulator has no right to stop the creditors vote. He also says he had received support for the DOCA proposal from former Storm clients.

ASIC has also announced it will widen its investigation of the Storm collapse to include the company’s financial backers, including Commonwealth Bank, Macquarie Group and Challenger Financial.