Margin Loans Have you lost money though a MARGIN LOAN?

I am looking to make contact with ordinary people who have lost money through a Margin Loan(s).

I am gathering information with a view to launching a class-action against Australian-based banks/financial institutions and Australian Financial Advisors.

At this stage, I just need basic information from people who have been affected by Margin Loan losses, to see if a “Cause of Action” can be established. Unless there is very solid grounding for a case, litigation will not proceed.

Please email [email protected] with answers to the following:
• Name of your bank/lending institution;
• Name of your financial adviser;
• Estimate of the amount you have lost;
• Amount of your Margin Loan;
• Your contact details please.

Regards, Elizabeth

PS if you are fortunate, and have not been caught up in a Margin Loan loss, then please pass on my email address onto someone you suspect may have been, or will know someone who has been.

PPS If you are classified as a “sophisticated investor” {you know who you are} then unfortunately, I cannot help you, but I’m interested in hearing from your friends!

There is power in numbers!!!

 

so..... let me get this straight. you've lost money in the recent downturn, and you want someone to blame. because investment markets always go up right???

You'll have a hard time suing a margin loan provider, a financial advisor might be your better bet. But no doubt if you've used a financial advisor you've signed a statement of advice which outline the risks of a margin loan. If thats the case good luck. I just hope your advisor was sloppy or else your going to have a hard time suing everyone.

When I lose money on the horses should I sue the booky, the horses, the trainers, the race track or should I look at myself???

 

I suggest that you BLAME yourself or as in my case l blame MYSELF. The results from greed and desperation for short term cashflow should not be BLAMED on others.
I don't think a valuable forum such as this should be wasted with "Hair Brain" ideas with no real criteria to establish the basis of claims is put forward.
Regards

Denis

 

You don't LOSE money through a MARGIN LOAN...you lose money when the underlying security goes down in value.

You may want to re-read that statement carefully.

The margin loan only amplifies the size of the loss (or gain ), through leverage. It's not the loan itself that causes the loss.

Good luck trying to round up sympathy stories...there will be a few. But they will be caused by the underlying shares/MF's losing value, and NOT the margin loan.

Welcome to the forum by the way, hopefully you can hang around after you've got your class-action numbers.

Rgds, Chris


Edit: How much money would you have "LOST" if you had taken out a 40% LVR margin loan against KCN last November?? Please post your response.

 

Nice run!

 

Oh yes by all means let find someone other than ourselves to blame. Class action - what rubbish!

I'm certainly not what you would call a "sophisticated investor” but I do take responsibility for my own actions and am wise enough to do my own research no matter who gives me advice. I'm certainly not going to hand over my money unless I understand the implications of what I am doing and have covered reasonable continigencies. People who blindly follow advise with no real understanding only have themselves to blame. With the enormous amount of free information and opinions available there is no excuse to be ignorant these days.

Yes there are people who lost money - I am one of them, however there are also people who made lots of money using margin loans.

 

Yes, at the end of the day we are all responsible for our actions but I believe that some "devil forces" are manipulating market and no matter how “sophisticated” you are the world will always turn against you. Looking at the graph I can see where Liz is coming from. There may be bit more to her story beside Margin Landing and bad luck.

Welcome to the ASX cassino! Dare to win against the house?

PS. Yes, I also lost my money in ASX cassino. That didn't put me off. It fired me up and I can't wait for right moment to enter the market again. Expensive but very voluble lesson.

 

"Welcome to the ASX cassino! Dare to win against the house?"

Hmmmm...I would say that not having tested strategy in place, Stock Market is a very expensive place to be...
If you do not know how to win against ‘the house’, do not play with matches.

 

Wow, you guys are so defensive!!

In truth it is highly likely that there has been some reckless and irresponsible margin lending done by some lenders, particularly to unsophisticated investors (note that the OP quite specifically excludes sophisticated investors).

You only have to take a look at what happened with Storm Financial to get the sense that there has been some crazy margin lending going on, so why not have a crack at the lenders if you can prove that people have been recklessly sold margin loans without being given proper advice?

 

Sim,

From the Australian Bankers' Association Code of Banking Practice:

"25.1 Before we offer or give you a credit facility (or increase an existing credit facility), we will exercise the care and skill of a diligent and prudent banker in selecting and applying our credit assessment methods and in forming our opinion about your ability to repay it. "

(yes, a margin loan is a line of credit)

In a system where banks pay incentives to financial advisers to sell margin loan products to consumers, it is not acceptable to also rely on the advice of the same financial adviser in forming an opinion about the ability of a customer to repay.

I suspect there are many cases where customers will be able to successfully demonstrate that such diligent and prudent care has not been taken.

 

I guess we are going to have to agree to disagree on this one! To my mind, the equivalent to what you are effectively saying is that when you sign up for a credit card, it is the responsibility of the commission sales guy who accosts you in the shopping mall to get you to sign up to ensure that you are able to repay the debt, rather than the bank who provides the card.

In your opinion, is a bank which relies on the advice of an adviser who earns commissions from selling the margin loan product, in forming an opinion as to the ability of a client to repay a loan doing enough to satisfy its obligations under the banking code of conduct?

I think the critical point here is the ability to meet LVR obligations from external sources and the fact that this is being assessed by parties (financial advisers) who have a vested interest in seeing the product sold. In other words, if you can't make a margin call and your holdings are sold down and you end crystallising a loss, the advice given to the bank as to your ability to repay that loss is tainted and in my opinion not sufficient to meet the banker's code of conduct. If I was a lawyer that would be the angle I would take in these sorts of cases, anyway.

 

Sim

I am merely pointing out that in addition to the role they play in advising clients, the financial advisers often appear to be relied upon by the margin lender as a substitute for doing their own proper checks on client suitability for the margin loan products being sold.

When I borrow money from the bank to buy a house, the bank conducts thorough checks as to my ability to repay the loan should things go pear shaped. This kind of diligence does not seem to occur with margin loans, so the bank has no way of knowing if the client has access to external funds/assets to utilise if they can't meet a margin call or end up owing more than the value of the assets which are liquidated, in a worst-case scenario.

What we are really debating is whether the bank has a duty of care here, not just the adviser. I believe it does, you appear to disagree - that's fine. Let's see what the courts say.

(for the record, I do not have any of the views that you have attempted to express for me in your post).

 

Let's leave the judgement to the Court

Guys, forgive me if my financial terminology is not correct. I am not a lawyer, nor am I a financial person. I am simply playing an "Erin Brockovich" type role here, which I did previously for a class-action involving my Mum that was similar to this one.

Everyone said to us, "blame yourself", "it can't be done", "you should have done proper research first", "there is no one to sue" etc etc, but we won against a major Australian financial institution, and my Mum's financial adviser (and ultimately bankrupted him, and got him a life-time ban from ever being a financial adviser again) and got many many people their money back. So, to those of you who doubt, go ahead. I have stood firmly in these shoes before.

As I said in my original post, no case will be started unless a solid "cause of action" is established. Contrary to what you smart financial people are saying (yes, some of you have been very defensive!) there are some very senior legal minds out there who are currently chewing this over, the idea has not been dismissed at all, as you were so quick to do. There are a lot of people out there who should never have been given a margin loan in the first place, had no understanding of what they were entering into, and the banks did not do thorough checks {yes, remember the good old days of easy credit}.

All I ask is that people who have lost money via a margin loan, make contact; I wasn't asking to be judged - we'll leave that to the Courts. Without actual people to talk to (who've lost $ via Margin Loans) and hear the representations that were made to them by the banks/lending institutions and the financial advisers, the lawyers cannot be sure that there is a solid case.

Contacting me does not committ you anything, and does not cost anything; there is currently no case, this is just discussion, so please play nicely

Regards, Elizabeth

 

Why does this statement give me visions of a regular joe blow financial advisor getting screwed over on some technicalities of a legal system that at the same time is unwilling to factor the lack of common sense used by an individual when it came to investments.

I'm not looking forward to seeing the other side of this recession given the amount of regulation and oversight that will be needed for the financial and related industries to make sure people don't let greed get in teh way of common sense...

It really is a shame.

 

I think that last post of Elizabeths should be linked to the RG146 sub-forum...

It would give all those poor people studying for their exams nightmares, and they prob wouldn't complete the course!!

Anyway...in the spirit of the thread :

Elizabeth, I have "lost money using a margin loan". I had to pay a margin call in October last year, approximate value was $7K. Could you get it back for me please? The lender is Suncorp. I do still hold the exact same number of units in the Managed Fund, so could you also please start a suit against the fund to get them to increase the unit price, such that I get my money back?

Thanks in advance,

Chris

 

I sincerely was thinking about moving in to the Financial Planning industry as well - with the primary intention of hoping to better people's financial lives, but on the way to uni today I was seriously reconsidering the idea. I just have no interest in trying to help others if it only opens myself to the potential for legal recourse down the line if advice isn't 100% perfect.

This sort of stuff has seriously scary implications for the financial planning industry. I imagine if a lot of class actions cases against financial planners are formed and it puts a lot of financial planners out of business (not to mention the need to mitigate the increase risk of legal action against your FP firm), we'd see a rapid increase in the fees required to see a financial planner and they'd be high enough to put such services out of reach for individuals who need them most. A bit like the legal system I guess...

I really think the system is excessively crazy! Yesterday I emailed a friend of 10 years asking for a brief legal opinion on a intellectual property related issue and he was so scared and paranoid about the legal ramifications (in terms of his company and the court system) of me merely emailing him (at his work email) for his advice (as a friend) that he could barely give me a straight answer of why he wasn't allowed to speak with me about the issue.

It is seriously crazy that a good friend can't tell another friend "I reckon you have a case (or don't have a case), but you should seek proper legal advice".