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Nathans Finance Directors Charged Over Statements To Investors

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Dec 23 NZPA - The Securities Commission has laid charges against the directors of failed finance company Nathans Finance, alleging they misled investors by making false statements in company prospectuses.

The Securities Commission has laid criminal charges and issued civil proceedings against John Hotchin, Donald Young and Kenneth Moses.

Criminal charges and civil proceedings have also been filed against a fourth director believed to be resident in Australia.

"The commission believes Nathans' offer documents misled investors about the risks of investing in Nathans Finance, especially the risks of its extensive related party lending," commission chairwoman Jane Diplock said.

Nathans, owned by NZX-listed VTL Group, went into receivership last August owing around $174 million to 7000 investors, of which less than 10 percent was expected to be recovered.

The commission alleged that directors made untrue statements in the company's December 2006 prospectus and investment statement, and a prospectus extension certificate in March 2007.

The statements related to Nathans having adequate liquidity, diversified lending, robust lending processes and no bad debts.

The commission also alleged that advertising letters sent to members of the public contained untrue statements.

Mr Hotchin had resigned his directorship by the time the adverts were sent out.

The criminal charges carry a maximum penalty of five years' imprisonment or fines of up to $300,000.

They were laid in Auckland District Court at Auckland on December 12. The defendants have been summonsed to appear on January 23, 2009.

The penalties in the civil actions are up to $500,000 against each of the directors.

The civil action is a first step towards seeking compensation for investors, and the commission will consider pursuing compensation claims in due course, Ms Diplock said.

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