Storm Financial was turning over $77 million annually a year before it collapsed and cost thousands of investors everything they owned.
When it went under in 2009 with debts of $88 million many of its clients, who were retired or about to retire with few assets and a limited income, lost their properties and life savings.
On Thursday the Federal Court indicated the Queensland husband and wife team behind Storm, Emmanuel and Julie Cassimatis, would be fined $70,000 each and be banned from managing corporations for seven years.
The maximum penalty for a breach of directors' duties is $200,000.
The judgment comes after they were in 2016 found to have contravened their legal duty to do their job with "care and diligence".
They had given inappropriate financial advice to vulnerable investors.
Essentially, they advised clients to borrow money against their homes to fund investments in the ASX300 but this backfired when the global financial crisis hit in 2009.
"Some of the relevant investors lost their family homes, or incurred lengthy postponements of their planned retirements," Justice John Dowsett said.
"By failing to give reasonable consideration to the circumstances of the relevant investors, Storm provided inappropriate advice which exposed the relevant investors to these devastating consequences."
The penalties indicated by Justice Dowsett is subject to Australian Securities and Investments Commission (ASIC) and the couple agreeing to the draft orders.
While some investors burnt by Storm's collapse may want Mr and Mrs Cassimatis to be jailed, Storm Investors Consumer Action Group chairman Mark Weir thought the proposed penalties were appropriate.
"There was no criminality, no embezzlement of funds," he said.
"At no time was there malevolent intent to defraud customers."
Storm's failure had hurt many investors but the real problem was with the banks who abused their obligations and didn't behave diligently and responsibly when loaning money, he said.
He intends to make a submission to the ongoing banking royal commission.
Unless there's systemic change, he worries others will lose their savings chasing investments.
"There's a good chance that the same thing will happen again," he said.
Lawyers for ASIC and Mr and Mrs Cassimatis have a week to respond to Justice Dowsett's draft orders.
Australian Associated Press