A Federal Court ruling against the heads of Queensland's failed Storm Financial highlights the duty of directors to steer companies away from breaches of the law, Australia's corporate watchdog says.
The Australian Securities and Investments Commission (ASIC) began civil proceedings against Emmanuel and Julie Cassimatis in 2010, after it collapsed the previous year with debts of $88 million.
Justice James Edelman on Friday found Mr and Mrs Cassimatis had breached the Corporations Act by failing to carry out their job with "care and diligence" by giving inappropriate advice to vulnerable clients.
ASIC Commissioner Greg Tanzer welcomed the ruling.
""This is an important decision which emphasises the importance of directors' duties to ensure that they do not cause the companies that they control, to breach the law," he said.
"The decision also highlights the significant obligation on financial services licensees to provide financial advice that is appropriate to the persons to whom it is given."
Thousands of customers were affected when the Townsville-based company's strategy backfired badly during the global financial crisis.
Justice Edelman ordered the matter be listed for directions for a hearing on penalties and other relief at a later date.
