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The Securities Commission has announced its investigations into collapsed finance companies were proceeding well and prosecutions were likely relating to several finance companies.
"We are assessing whether the information given by the companies to investors before they went into receivership was true and not misleading, and that all material information was disclosed," Securities Commission Chairman Jane Diplock said in the regulator's April Bulletin.
"We are working to establish whether there may be grounds to lay criminal charges or seek civil penalties under the Securities Act," Diplock said.
"It is important that people who raise money from the public are held to account if they mislead their investors. We will take court action if our investigations show this to be in the public interest and in the interests of investors."
Law changes in force since October 2006 allow the Commission to go to court to seek compensation for affected investors, for prospectuses registered after that date. It can also seek civil penalties in some circumstances. These actions can be taken against each director of the company, and any promoter of the offer.
Investors can also sue for compensation for loss caused by false or misleading statements.
The Commission was continuing to investigate whether compensation was possible if investors' losses can be attributed to misleading statements or omissions in the prospectuses.
It was working with the receivers and with the other enforcement agencies, to progress these matters as quickly as possible. "Where necessary we are using our inspection powers under the Securities Act to obtain information."
The Commission reiterated it could not protect people against genuine investment risk.
"However, some of these collapses raise serious questions as to whether directors were giving investors an accurate picture of their financial situation and the risks of investing with them, or even in some cases whether there was fraudulent behaviour," it said.
The Commission said its two main enforcement priorities were investigating finance companies and enforcing new securities trading law, in particular investment adviser disclosure.
"Some investors who lost money in finance companies claim that they were not told about high commissions their advisers stood to earn from recommending those finance companies," it said.
- INTEREST.CO.NZ
