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10-56AD ASIC moves to next phase of Storm investor compensation
ASIC today announced that it had completed a major phase of its investigation into the affairs of Storm Financial Limited (Storm).
In relation to recovery of compensation for investors, ASIC will now move into the next phase (until the end of May 2010) of entering into confidential discussions with the individuals and entities which have been the subject of its investigations to see if a commercial resolution can be reached which will be acceptable to ASIC and which ASIC would be prepared to recommend to investors.
ASIC considers a commercial resolution, if it can be achieved, will be preferable to protracted litigation. However, in the event that during this period a commercial resolution is not or cannot be reached with particular individuals or entities ASIC will make decisions on compensation actions it will then launch in relation to those individuals and entities for the benefit of investors.
ASIC will meet with representatives of Storm investors and Slater & Gordon (which represents many Storm investors) to outline what it is doing and will, as far as reasonably possible (within the important confidential constraints of the discussions which ASIC proposes), keep them informed. ASIC will also during this period release a dedicated website for Storm investors both to keep them informed and to collect additional information which ASIC may need in relation to compensation. There will be a paper back-up for those investors who may not have internet access.
In relation to offers made to Storm investors as part of the Commonwealth Bank of Australia (CBA) Storm Resolution Scheme, ASIC considers that each Storm investor needs to decide for themselves, with the benefit of legal advice, whether or not to accept the offer. ASIC suggests that, amongst other things, a Storm investor obtains legal advice about whether any agreement reached between a Storm investor and CBA will allow the Storm investor to participate in, or have the benefit of, any compensation arrangements (which any ASIC action may secure). As investors will know, CBA agreed to such a ‘carve out’ some time ago to enable its customers to benefit from any subsequent ASIC action.
As an alternative, Storm investors should seek an extension of time from the CBA within which to accept any offer to enable them to assess the results of discussions which ASIC is proposing.
As this matter remains operational, ASIC will not be making further public comment until confidential discussions have been completed. ASIC’s investigations into Storm covers, in addition to compensation, other enforcement actions and its investigations will continue.