Nathans directors enter not guilty pleas

Photo / Glenn Jeffrey

Nathans Finance directors Mervyn Doolan, John Hotchin, Kenneth (Roger) Moses and Donald Young yesterday pleaded not guilty to charges laid against them by the Securities Commission.

The directors' trial will begin on March 14 next year.

They have requested a trial without a jury.

The proceedings follow extensive investigation into Nathans' since its collapse on August 20, 2007.

When Nathans was placed into receivership it owed about $174 million to about 7000 investors.

The commission said that according to receivers Pricewaterhouse-Coopers, less than 10 per cent is likely to be recovered.

It alleges Nathans' offer document misled investors about the risks of investing in the company, especially the risks of its related party lending.

The Securities Commission also alleges that the directors made untrue statements in the company's registered prospectus and investment statement of December 13, 2006.

These statements concern lending to related parties and stated that the company had no bad debts, it had adequate liquidity, that its lending was diversified and that all relevant matters had been disclosed in the prospectus.

The commission alleges the directors made further untrue statements when they signed a prospectus extension certificate on March 30, 2007.

These stated the company's financial position had not materially and adversely changed since its last balance date, and that the December 13, 2006 prospectus was not false or misleading.

Criminal and civil charges have been laid.

The commission has applied for declarations of civil liability and civil pecuniary penalties of up to $500,000 against each of the directors.

Its main reason for this is to take steps towards compensating investors who invested under the December 13, 2006, prospectus.

The civil proceedings are on hold pending the outcome of the trial.