The Cairns office of Storm Financial had no idea what was happening to its clients' money as the market plunged precipitously late last year, the former managing director of Storm Financial in Cairns, Gus Dalle Cort, told a parliamentary committee hearing today.
Mr Dalle Cort, appearing before the committee's investigations into the Storm's collapse, said he had not contacted banks directly about the plunging market and its effect on the margin loans that formed part of Storm's disastrous business model.
Instead he said he directed all his calls to what he termed "Storm central", which was Storm's headquarters in Townsville.
But he said he had received no information about what was occurring from this contact.
"I, like my clients, trusted the system ... the way we operated was through Storm central," he said.
He also said he was caught out personally, terming himself "the biggest loser in Cairns" because he ended up with negative equity of more than $450,000 from his own margin loan.
Mr Dalle Cort blames what he terms as "product failure" for Storm Financial's collapse, particularly the failure to call in margin loans before they reached negative equity.
He termed as "bizarre" the different information available through Colonial Geared Investments' web site about the impact of the sharemarket fall on his own investments.
But again, Mr Dalle Cort said he did not direct calls about his own situation to his lender, but only directed his inquiries to "Storm central".
Mr Dalle Cort also told the committee that products offered by Storm had not been the responsibility of Storm Financial's advisers, and that documentation for loans had been handled by Storm's Townsville headquarters.
The chairman of the committee, Bernie Ripoll, asked Mr Dalle Cort what his clients had received for their fees if the banks were entirely responsible for the lending.
The committee, which is sitting in Cairns, Townsville and Brisbane over the next three days, has dwelled on evidence about poor loan documentation, and submissions that claimed incomes had been overstated in their documentation for loans.
swashington@smh.com.au
SMH
