Four Capital + Merchant Finance directors face criminal charges and civil proceedings following investigations by The Securities Commission.
Neal Nicholls, Owen Tallentire, Colin Ryan and Robert Sutherland directed the finance company which into receivership on 23 November 2007, owing approximately $167 million to some 7,000 investors.
Former director Wayne Douglas, who resigned in February 2007, has also been charged.
Commission chairman Jane Diplock says it is alleged Capital + Merchant Finance misled investors by misrepresenting the investment risks, especially in relation to related party lending, insurance cover and liquidity.
Most of the charges carry a maximum penalty of five years imprisonment or fines of up to $300,000.
It is alleged the directors made untrue statements in the registered prospectus and investment statement dated 15 August, 2006, mainly in respect of related party lending and loan management.
The Commission also alleges the current four directors made similar untrue statements in the 10 September, 2007 prospectus and in five advertisements issued in 2007 – however Mr Douglas had resigned by then and is not involved in that claim.
The Commission has applied for declarations of civil liability and civil pecuniary penalties of up to $500,000 against each of the four directors.
The main purpose for civil action is to take the first step toward compensation for investors who – receivers say – are unlikely to see their money again.
The investors who were misled invested under the 10 September, 2007 prospectus.
The charges were filed at the District Court at Auckland on December 18, 2009 and the first court appearances are scheduled for April 8, 2010.
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