CBA may well be under fire for last night's abortive capital raising but the bank is likely to get most of its money from the CGI (Colonial Geared Investments) margin loans to Storm clients.

They may, however, be holding the bulk of the outstanding home investment loans arranged through Storm - with some borrowers unable to repay.

Sources believe the bank had to get very heavy with the Cassimatises to get those instructions from him to redeem anyone with LVR (loan to valuation ratios) over 90% - and this was the week before they decided to wind the funds up.

As for the mooted prospect of legal action, it is hard to envisage Storm and CBA getting a chance to square up in court as Storm will like be gone before then, and doesn't really have a case.

CBA, CFS and CGI, however, do have a large reputation to protect - they made the toys and made some of them to Storm's specifications. It should be emphasised that Storm was the one which recommended their clients to play with these death stars.

For its part, Storm has been strongly implying an endorsement by CBA and other lenders. It's not a strong case.

It looks like Storm's clients have more than $1.5 billion in margin loans. Macquarie is the other major provider but other banks are probably in the mix too.

Factoring in the high LVRs - disclosed here yesterday as high as 85% with another 10% buffer - a higher margin loan amount would explain the panic with the October advice from Storm to its clients to switch to cash.

If the total value of Challenger & CFS funds was around $1.5 billion with the ASX300 at 3500 and most clients seemed to be in the 80%+ LVR range, then would have to be close to that number - plus they also have their home investment loans.

According to financial planners who are offering an independent review of Storm client positions, many clients appear to have had same mix of Challenger/CFS funds + MLC Vanguard Aust Share Index (maybe they are long-term clients as MLC was an index option used before he arranged the Storm-badged products).

Emanuel Cassimatis used to be an advisor at MLC. And the MLC product option also adds numbers on the investment side with subsequent additions to the associated margin loan side.

Of five clients reviewed by one external panel advisor, seconded to the mess, all five had used CGI's Accelerator margin loan and CBA home investment loan (except one who had a Westpac home loan - probably through pre-existing links).

All were on LVRs of over 90%. Insane advice which could only be explained by the allure of high Storm advisory fees trumping the responsibility to properly cater for client risk.

It would be difficult to work out how much money in the NAB/MLC Vanguard product belongs to Storm clients as it is not badged.

Adding this however would bring the number close to the $4.5 billion in total funds under management which Storm claims it had - that is assuming too that the claim is correct.

And that is without including the non-Stormised offices (old product recommendations) which are likely to run into hundreds of millions, but being non-badged may not have the higher LVRs.

There was a story on Bloomberg last night - involving quotes from a Storm spokesperson - which said Emmanuel and Julie Cassimatis were among CBA's cited 450 Storm clients who had been issued margin call notices. The total loan amount with CBA/CGI is around $1 billion, the story said.

ASIC is still nowhere to be seen.

mwest@fairfax.com.au

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