media release (20-074MR)

Federal Court confirms Storm Financial directors breached duties


The Full Federal Court has confirmed that the directors of Storm Financial, Emmanuel and Julie Cassimatis, breached their duties as directors. These proceedings were an appeal by the Cassimatises against the original judgment handed down in August 2016. ASIC sought to dismiss the appeal with costs. In its 150-page judgment, the full Federal Court, by a majority of two to one, dismissed the appeal.

Since around 1994, Storm Financial operated a system created by the Cassimatises, in which "one-size-fits-all" investment advice was recommended to clients. The advice required clients to invest substantial amounts in index funds, using "double gearing" (Storm Model). This approach involved taking out both a home loan, as well as, a margin loan in order to purchase units in index funds. Once initial investments took place, "Stormified" clients would be encouraged to take "step" investments over time.

By the time of Storm's collapse in early 2009, approximately 3,000 of its 14,000 clients had been "Stormified". In late 2008 and early 2009, many of Storm's clients were in negative equity positions, sustaining significant losses. 

The case that ASIC advanced centered around specific investors who were advised to invest in accordance with the Storm Model. ASIC alleged that the advice Storm provided to those investors was inappropriate to their personal circumstances. The majority of investors were retired or approaching and planning for retirement, had little or limited income, few assets and had little or no prospect of rebuilding their financial position in the event of suffering significant loss. 

ASIC alleged that the Cassimatises were responsible for the day-to-day significant decisions in relation to the provision of financial services to Storm's clients and exercised a high degree of control over its systems and processes. Their failure to take reasonable steps to prevent Storm from giving this inappropriate advice meant that they had not exercised their powers as directors with the degree of care and diligence that a reasonable person would have exercised in that situation.

The Federal Court found that as directors of an Australian Financial Services Licensee theCassimatis’ “responsibilities included ensuring that investors obtained from Storm (and particularly retail investors exhibiting the five characteristics of vulnerability […]), consideration and investigation of the subject matter of the advice to be given to them (and given to them), as was reasonable in all of the circumstances and that, having regard to those matters, the advice given to those investors was appropriate to each of the 11 investors in question.”

Commissioner John Price said, ‘This important decision reaffirms ASIC’s view of the importance of directors’ duties and the obligations on financial services licensees. We hope that, with this decision, the aftermath of the Storm Financial collapse is now at an end.’


ASIC commenced the original civil penalty proceeding against the Cassimatises in late 2010 (13-158MR). The trial took place between 30 May and 30 June 2016. The Federal Court found against the Cassimatises in August 2016 (16-277MR) and imposed civil penalties in March 2018 (18-081MR).

[This MR was redacted on 09/09/2022 in accordance with ASIC policy - see INFO 152 Public comment on ASIC's regulatory activities.]

In May 2013 ASIC secured $1.1 million in compensation on behalf of two former Storm investors, Barry and Deanna Doyle (13-122MR).

In May 2013, ASIC intervened in the application for Court approval of the settlement of the related class action brought against Macquarie Bank in respect of Storm as it had concerns about the fairness of the settlement arrangements. On 12 August 2013, the Full Federal Court agreed that the distribution of the settlement sum was not fair and reasonable to all group members (  Under a revised settlement, Macquarie Bank agreed to pay $82.5 million by way of compensation and costs (14-244MR).

In September 2014, ASIC entered into a settlement agreement with the Bank of Queensland Limited to pay approximately $17 million as compensation for losses suffered on investments made through Storm (14-244MR).

Editor's note:

On 24 April 2020, the Applicants (Emmanuel and Julie Cassimatis) filed an application for special leave to appeal to the High Court of Australia in relation to the liability, penalty and full Federal Court judgments.

Editor's note 2:

On 5 August 2020, the High Court of Australia dismissed Mr and Mrs Cassimatises’ application for leave to appeal. The High Court stated that there was “insufficient reason to doubt the correctness of the reasoning of the majority of the Full Court of Australia”. The High Court has ordered that Mr and Mrs Cassimatis pay ASIC’s costs of the application.

ASIC will now proceed to recover the civil penalties to be paid by Mr and Mrs Cassimatis and ASIC’s costs for the trial, appeal to the Full Court and application for special leave to the High Court, for which they are also liable.

Editor's note 3:

On 18 March 2021, Mr and Mrs Cassimatis each paid $70,000 in payment of the pecuniary penalties ordered by the Federal Court.

ASIC will now proceed to recover ASIC’s costs for the trial, appeal to the Full Court and application for special leave to the High Court.

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