Dominion, North South Finance directors charged

Dominion Finance Group went into receivership in 2008, owing about $176.9 million. Photo / Dean Purcell

The Securities Commission has pressed charges against the directors of Dominion Finance and North South Finance over offer documents which it alleges were misleading.

The Dominion Finance Group went into receivership in September 2008, owing about $176.9 million to about 5900 investors.

In a statement released today, the Securities Commission says it has laid criminal charges and issued civil proceedings against Dominion Finance Group and North South Finance Limited directors Vance Arkinstall, Richard Bettle, Terence Butler, Ann Butler, Paul Forsyth and Robert Barry Whale and is considering "further proceedings".

The Commission alleges that Dominion Finance Group's offer documents and advertisements misled investors by misrepresenting the investment risks, in relation to related party transactions, lending standards, loan quality and impairment, liquidity and the company's overall financial position.

"The Commission also alleges that North South Finance's offer documents and advertisements misled investors in relation to related party transactions, liquidity and the company's overall financial position," Commission chair Jane Diplock said.

The Commission alleges that the directors made false statements in the Dominion Finance Group registered prospectus dated September 2007, as amended by an extension certificate in December 2007 and the North South Finance registered prospectus dated September 2007, as amended by an extension certificate in December 2007.

The extension certificate's stated the relevant company's financial position had not materially and adversely changed since the company's last balance date and that the prospectus was not misleading by failing to properly refer to adverse circumstances.

The Commission alleges this was false and that the directors' statements misled investors.

In addition, the Commission alleges that a quarterly newsletter of Dominion Finance Group and a letter to the investors of both Dominion Finance Group and North South Finance distributed during 2008 contained similar untrue statements about the financial position of the companies.

The case is due in court at the end of the month.

The criminal charges carry a maximum five year jail term or a fine of up to $300,000. The civil proceedings carry fines of up to $500,000 for each of the directors.

The Commission says it is continuing its investigations into both companies and their parent company Dominion Finance Holdings and is considering further proceedings.

- NZ HERALD STAFF