Emanuel and Julie Cassimatis of Storm Financial entering the Brisbane Federal Court earlier this year. Photo: Glenn Hunt
Failed advisory firm Storm Financial was "blind" to the true state of its clients' investments late last year because a major bank was providing faulty data, the company's co-founder has claimed.
Julie Cassimatis took the stand at a Federal Court hearing in Brisbane yesterday after her husband, fellow managing director Emmanuel Cassimatis, spent the morning answering questions about the firm's collapse.
Mrs Cassimatis was quizzed about the company's relationship with the Commonwealth Bank, which provided margin loans to clients to fund stockmarket purchases.
She echoed her husband's testimony that it was up to the banks to issue margin calls to investors whose loan-to-value ratios were becoming too high as the market took a battering.
Mrs Cassimatis said the Commonwealth Bank provided daily updates on clients' borrowing and investment position via Storm Financial's research and development arm Ignite.
But she said the spreadsheets issued by the bank were "incorrect" and "useless" between mid October and late November last year.
"We were blind," she said.
Liquidator Worrells is using the court examination to gather more information about Storm Financial, which was wound up in March with debts of about $80 million.
The court hearings are in addition to a federal parliamentary committee inquiry into the Townsville-based company.
Mr Cassimatis made similar accusations about "deeply and hopelessly flawed" data coming from the Commonwealth Bank's margin lending subsidiary, Colonial Geared Investments, during his evidence at an inquiry sitting in Brisbane four weeks ago.
"The data was scrambled. They didn't have the data; they were behind in the data," Mr Cassimatis told the inquiry.
"In October, November we knew the data was behind but we could not easily prove it."
The Commonwealth Bank's business and private banking group manager, Ian Narev, told the inquiry the bank may have provided inaccurate data to Storm Financial but only in "isolated cases".
"So we do know that substantially all the information was provided and it was substantially correct, at a minimum," Mr Narev said during his testimony early this month.
"But that does not mean that in isolated cases there may have been problems."
Mr Cassimatis yesterday denied his failed advisory firm had justified its large upfront fees by promising clients ongoing monitoring of their investments.
"We were not a margin lending business and we did not have the desire nor the capacity to completely manage the loans," he said on his second day at the stand.
It came after revelations Storm Financial's software did not allow its advisers to easily access a list of clients whose investments were reaching margin call territory, at which point the banks should have warned some stock could be sold to improve the loan-to-value ratios.
The court hearing was adjourned early yesterday afternoon after Worrells' lawyer Craig Wilkins lost his voice.
