By Tony Field
The former directors of Hanover Finance Limited have labelled legal action by the Financial Markets Authority as "ill-conceived'.
The FMA launched legal proceedings in late March against Mark Hotchin, Eric Watson, Sir Tipene O'Regan, Greg Muir, Bruce Gordon and Dennis Broit.
It alleges the directors misled investors in its December 2007 prospectuses. The allegations relate to $35 million dollars of the more than $500 million that was invested with Hanover at the time of its collapse in 2008.
More than 16,000 people had invested money with Hanover.
Today former Hanover boss Mark Hotchin issued a statment on behalf of the former directors. He says they filed their Statement of Defence this week at the High Court. The directors say they "believe that the FMA is relying on incorrect information in a forensic accountant’s report that the FMA refuses to release to the directors. This is resulting in an ill-conceived and expensive piece of litigation."
"The directors have also provided the FMA with an independent expert report by forensic accountants on the issuer company’s liquidity management and forecasting, alongside a comprehensive legal opinion as to compliance with the Securities Act. This was done to ensure the FMA is fully informed and has been reviewing the appropriate information."
"It should be clear to the FMA that the facts of this case are completely different from other finance companies that have come before the Courts, and the directors are confident they will not be found liable."
The FMA says it is reviewing and considering the defendants' defences in detail. But as the matter is now before the Court, it will not be responding as to the merits of the directors' statement.
It has previously ruled out laying any criminal charges.
However an investigation by the Serious Fraud Office continues.
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