Storm Financial, which is under investigation by the Australian Securities and Investments Commission (ASIC) over advice given to clients around margin loans, has gone into voluntary administration.
The Townsville-based firm says it had no choice but to enter administration after key financier Commonwealth Bank of Australia gave it just one day to pay back tens of millions of dollars on corporate debt facilities owed to the bank.
“We were unable to raise the funds in such a short time period, and as a result, the directors of Storm Financial have been forced to appoint administrators,” Storm’s joint managing director Emmanuel Cassimatis said in a statement on JanuÃ‚Â¬ary 12.
Worrells Solvency and Forensic Accountants have been appointed voluntary administrator.
ASIC began its investigation on December 12 last year after the equity market crash left more than 450 Storm clients owing their margin lender more than the value of their portfolios.
At the time, clients were said to owe $30 milÃ‚Â¬lion, but as at December 24, there were just 300 clients owing $20 million.
The Financial Planning Association (FPA) said members had been “inundated” with calls over the Christmas period, and had forgone their own holidays to help out.
The FPA confirmed that it is continuing to refer Storm clients with margin lending issues to its members.
“Clients have used the FPA’s referral service, the FPA’s ‘find-a-planner’ website, and local contacts, to secure advice,” the FPA said in a statement.
“FPA members have been very forthcoming in doing what they can to provide people with a second opinion on their financial status, along with advice on what might be the next steps to take.”