The conservative vs risky argument has gone on ever since this mess started....investors claiming it was sold as a conservative strategy yet Storm themselves have said that the clients understood the risks.
And the monitoring of the portfolios has been excused away by Storm due to the "jumbled data" coming through late in the piece, despite as you rightly point out, the market having fallen not overnight but over almost 12 months from its highs in late 2007 to margin call territory in late 2008.
Its seems from Storm's perspective, and even some of their research notes which I believe doobsy may have relayed in this forum previously, there was this flawed thinking by Storm that the market will always revert back to its long term uptrend and what we went through in early to mid 2008 was nothing more than a blip, despite the numerous events that indicated it was much more serious than that. They even kept getting clients to go back to the well and gear up further as the market fell. Then, when Lehmann Brothers occurs and the market really dives at the end of 2008, Storm put up their hands and say its not our fault, the data we get from Colonial was so jumbled we had no way of knowing what the clients' positions were.
Absolute bulldust. They were index funds, the market was going down, Storm would have known full well the portfolios were in a lot of strife. It should have been averted long before they hit margin call territory. Particularly if, as claimed, it was sold as a conservative strategy.
The banks didn't sell the strategy, nor did they charge fees to monitor clients' portfolios- that was Storm. the only monitoring the banks were required to do was to protect themselves by issuing margin calls at the right time.
In this case, by the time the margin calls were/should have been made, the clients were already down the hole and in negative equity, due to the double gearing effect. They were screwed by Storm long before the margin call fiasco, because Storm rather than protecting the portfolios from further losses by managing the position during 2008, kept clients invested (and actually increased their debt) in the blind hope that the market would turn around before it was too late. And unfortunately the rest is history.