The Securities Commission has laid criminal charges and issued civil proceedings against Dominion Finance Group and North South Finance directors Vance Arkinstall, Richard Bettle, Terence Butler, Ann Butler, Paul Forsyth and Robert Barry Whale. Mr
The Securities Commission has laid criminal charges and issued civil proceedings against Dominion Finance Group and North South Finance directors Vance Arkinstall, Richard Bettle, Terence Butler, Ann Butler, Paul Forsyth and Robert Barry Whale.
Mr Arkinstall is chief executive of the Investment Savings and Insurance Association (representing the main funds management companies) and past chairman of the nominating committee for New Zealand Superannuation Fund Guardians.
Mr Bettle is a director of listed company’s Goodman Property Trust, Diligent Board Member Services and Eastern Hi Fi, in receivership.
Dominion Finance Group went into receivership on September 9, 2008 owing approximately $176.9 million to 5,900 investors.
Dominion Finance purchased North South Finance in 2005 for almost $40 million in cash and new shares.
North South is now operating under a moratorium with investors still owed $50 million.
The commission alleges Dominion Finance Group’s offer documents and advertisements misled investors by misrepresenting the investment risks, especially in relation to related party transactions, lending standards, loan quality and impairment, liquidity and the company’s overall financial position.
The commission also alleges North South Finance’s offer documents and advertisements misled investors in relation to related party transactions, liquidity and the company’s overall financial position.
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.
Receivers for Dominion Finance estimate secured debenture holders will receive less than 25% of their investment back. Unsecured creditors are likely to receive no return.
In addition to the criminal charges, which carry a maximum penalty of five years imprisonment or fines of up to $300,000, the commission has applied for declarations of civil liability and civil pecuniary penalty orders of up to $500,000 against each of the directors.
Under the Securities Act these applications must be made together.
Commission chairwoman Jane Diplock said the applications represented the first step toward compensation for investors who invested under the September 2007 prospectuses, as amended by the extension certificates on December 20, 2007.
A declaration of civil liability is conclusive evidence that can be relied upon by either the commission or investors themselves in any subsequent claims against the directors for compensation.
The commission will consider pursuing compensation claims in due course should it be in the public interest to do so.
Investors can take their own civil compensation proceedings whether or not the commission also does.
Meanwhile, the commission is continuing its investigations in relation to Dominion Finance Group, North South Finance and their parent company Dominion Finance Holdings (and their respective directors) and is considering further proceedings.
