ASIC today welcomed its agreement with the Bank of Queensland Limited for the institution to pay approximately $17 million as compensation for losses suffered on investments made through Storm Financial Limited. The compensation will be available to BOQ customers who borrowed from the bank to invest through Storm.
Following compensation payments made by Commonwealth Bank of Australia (CBA) (of up to $136 million) and Macquarie Bank Limited (Macquarie Bank) (of approximately $75 million), the settlement with BOQ will bring to an end the existing litigation brought by ASIC to obtain compensation for Storm investors.
The payment settles ASIC’s unregistered managed investment scheme proceedings against BOQ commenced in 2010, and the class action commenced against BOQ in 2012. The settlement with ASIC is conditional upon court approval of the class action settlement. Steps will soon be taken to initiate the settlement approval process with the court.
ASIC developed a compensation model in conjunction with external forensic accountants to calculate Storm investors’ losses. The model calculated the estimated loss for each investor (or investor group, where two or more investors invested jointly in the Storm model). It allocated each investor’s loss between the banks which funded investments in the Storm model.
BOQ’s compensation is intended to ensure each BOQ investor (or investor group) who takes part in the settlement will be able to get compensation of approximately 45% of that part of their total loss allocated to BOQ under the ASIC compensation model. This calculation takes into account compensation BOQ has already provided to some investors in accordance with Financial Ombudsman determinations.
Chairman Greg Medcraft said, ‘ASIC welcomes BOQ’s positive engagement in resolving this matter and its responsible approach in dealing with its customers.
‘The settlement provides a certain compensation outcome which ASIC considered preferable to awaiting judgment in its proceedings and possible appeals’.
ASIC commenced numerous Court proceedings against Storm in 2010.
‘ASIC brought the proceedings to achieve compensation for investors and to lay a platform for others to recover compensation.
‘Today’s announcement emphasises that both of these objectives have been achieved’, Mr Medcraft said.
ASIC will continue with its civil penalty proceedings against the founders of Storm, Emmanuel and Julie Cassimatis, for alleged breach of their directors’ duties.
Compensation payments under the settlement with BOQ will be administered by the solicitors acting for the lead applicants in the class action.
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