Nathans email reveals Moses' care

Nathans director Roger Moses. Photo / Paul Estcourt

An email between Nathans Finance directors and the company's legal counsel has revealed Roger Moses' caution when issuing advertisements under Securities Act regulations, a court was told on Friday.

Moses and fellow directors Mervyn Doolan and Donald Young have been charged with six breaches of the act. All three have pleaded not guilty.

A fourth director, John Hotchin, pleaded guilty to similar charges in February.

He escaped a jail sentence by pleading guilty, agreeing to pay $200,000 in reparations and assisting the Crown in its prosecution against the directors.

Hotchin took the stand last week and was questioned by defence counsel Paul Davison, QC, on Friday.

Davison questioned Hotchin about an email sent in 2006, a year before Nathans was placed into receivership, that discussed a newsletter that marketing manager Marion Short was working on and Moses' concern to get it right under the regulations of the act.

Moses said in an email: "We must take great care to ensure we cannot be accused of non-compliance. No matter how spurious the claim might be."

The issue centred on whether the newsletter could be seen as an advertisement, and that the information contained had to be consistent with the company's registered prospectus.

Hotchin said management prepared the offer documents together with the company lawyer and that the directors had little involvement in the preparation.

Davison asked Hotchin whether it was usual for Moses to show concern about information going out to the public and investors, to which he answered "yes".

The directors are defending allegations that the statements they issued concerning related party lending (to VTL), the quality of Nathans' loan book, its loan management practices and its management of liquidity were untrue.

The Securities Commission claims the directors made untrue statements in the company's registered prospectus and investment statement of December 13, 2006, and in a signed prospectus extension certificate on March 30, 2007.

Nathans Finance was set up as an investment vehicle for VTL, a vending machine business.

Hotchin and Doolan co-founded VTL, and Hotchin said last week that he had got the idea for the smart technology from his stint as a consultant for Corporate Cabs.

The system worked from a remote-controlled motherboard that reported if an individual machine had a problem or needed to be restocked.

Last week, Hotchin admitted that the company's prospectus and investment statement to December 13, 2006 were wrong, though he said at the time it was registered he believed them to be correct.

When Nathans collapsed it owed $174 million to about 7000 investors.

The case continues.