Watchdog sorting through mess of finance collapse

Sue Brown says the commission has finite resources. Photo / Supplied

The Securities Commission has completed investigations into 26 of the 50 failed finance companies but is still looking into the rest.

For the first time the commission has released a public update revealing its progress across the entire collapsed finance company sector. It shows charges have been laid against 14 of the companies either by the commission, the Ministry of Economic Development's national enforcement unit or the Serious Fraud Office.

Pending court cases include Bridgecorp, which has been set down for a 10- to 12-week trial at the High Court in July next year and Nathans Finance, which has been allocated eight weeks for a trial at the High Court in March.

A further 12 cases have either been closed, referred to other regulators or concluded with the directors giving legally binding promises to act properly in the future.

But some of the highest profile companies, including Allan Hubbard's Aorangi Securities, South Canterbury Finance and Hanover Finance, remain under investigation by the commission.

Director of investigation and litigation Sue Brown said the commission had decided to release the information because of an increased level of public interest.

"There is also a bit of a mood out there that we don't do anything because we don't say anything."

Brown said it was important that people knew what the commission did, what powers it had and how it went about its work.

She also hoped the information would make it clearer for the companies and directors involved in the investigations that some were still ongoing despite some time passing.

The commission does not normally comment on the progress of its investigations because of the risk of causing reputational damage to the businesses and individuals involved.

It also says it must take care not to prejudice the trial of any person who is charged by releasing too much information.

The first finance companies began collapsing in New Zealand in 2006, well before the global financial crisis, but it has only been in the past year that the commission has said it was investigating all failed finance companies.

Brown said in an ideal world all of the investigations would be finished by now.

"But the commission has finite resources and we have to work within that. It's important we do it in a responsible way that uses our resources appropriately."

The commission was working through the cases based on the order in which the failures had occurred but its investigations into companies that had put moratoriums in place could take longer because it was harder to get information.

Brown said she could not give a timeframe on how long it would take to complete the remaining 24 investigations.

"I am intent on pushing the investigations through as fast as possible. But it would be irresponsible to give a timeframe."

Investigations typically involved the commission assessing the company's offer documents to see if there had been any misstatements or omissions. If the company appeared to have breached the Securities Act then a formal investigation was opened.

The commission says it has no other power to enforce any duties that failed companies or their directors might owe to investors.

"It's a fairly specific power focused on the bottom of the cliff. But one of my goals in this role is to move the focus to the top."

Brown said the new super regulator, the Financial Markets Authority, which will incorporate the commission, would have a broader remit that aimed at being more proactive.

That is expected to involve more monitoring of the markets and more powers to gather information using search and seizure.

Brown said the regulator needed to be proactive to help promote confidence in the markets.